Hyundai Motor India IPO: The much-awaited mainboard initial public offering (IPO) of leading auto major Hyundai Motor India Ltd will open for subscription on Tuesday, October 15, 2024. The IPO of the Indian subsidiary of South Korea's Hyundai Motor Company is set to become the largest public issue in India, surpassing Life Insurance Corporation's (LIC) IPO worth ₹21,000 crore. It would also be one of Asia’s biggest IPOs in recent years.
South Korean automaker Hyundai aims to raise $3.3 billion in its IPO and has set the IPO's price range at ₹1,865 to ₹1,960 per share, as per a Bloomberg report. Bids will open next week, and shares will start trading on October 22.
The upcoming IPO will be Hyundai's first stock market listing outside South Korea. It will also mark India's first carmaker to go public in over two decades since Maruti Suzuki India's public issue in 2003. Hyundai Motor India is also the second largest carmaker by sales in India after Maruti Suzuki India.
Compared to Maruti Suzuki, Tata Motors, and other competitors, Hyundai Motor India is seen to be stronger due to the listing since it may simplify financing in the future. According to the red herring prospectus (RHP), the company will not utilize the IPO proceeds directly for the company.
The Hyundai Motor Group, which includes Hyundai and Kia, is the world's third-largest auto original equipment manufacturer (OEM) based on passenger vehicle sales, having sold 7.3 million vehicles in 2023. The South Korean company has been operating in India since 1996. It is one of the few foreign automotive giants to hold a strong ground in the country, with US rivals Ford and General Motors failing to crack the local market.
1.Hyundai Motor India IPO Key Dates: Hyundai Motor India IPO opens for subscription on Tuesday, October 15 and closes on October 17, 2024. The allocation to anchor investors for the Hyundai Motor India IPO is scheduled for Monday, October 15. Hyundai Motor India IPO will open for anchor investors on Monday, October 14.
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Tentatively, Hyundai Motor India IPO basis of allotment of shares will be finalised on Friday, October 18, and the company will initiate refunds on Monday, October 21, while the shares will be credited to the demat account of allottees on the same day following refund. Hyundai Motor India shares will debut on BSE, NSE with tentative listing date fixed as Tuesday, October 22, 2024.
2.Hyundai Motor India IPO Price Band: According to news agency Reuters, the Hyundai Motor India IPO price band is set at ₹1,865 to ₹1,960 per share. The RHP has not mentioned the price band so far; however, reports indicate it will be announced on October 9, 2024. The cap price shall be at least 105 per cent of the floor price and shall be less than or equal to 120 per cent of the floor price.
3.Hyundai Motor India IPO Details: According to Bloomberg, Hyundai Motor India plans to raise around $3.3 billion, or over ₹27,000 crore. Hyundai will not issue new shares in the IPO which will involve its South Korean parent selling up to 142,194,700 shares (14.22 crore shares) or a 17.5 per cent of its stake in the wholly owned unit to retail and other investors through the offer for sale (OFS) route.
Hence, the book-built issue is entirely an OFS of 14.22 crore shares with a face value of ₹10 each. Reuters said the South Korean automakerwill still hold 670 million shares in Hyundai Motor India, or an 82.5 per cent stake, after the IPO. If shares are priced at the top end of the range, the IPO effectively values the top automaker at $19 billion or ₹15,954 crore in the country's biggest stock offering this year.
4.Hyundai Motor India IPO Lot Size: According to reports, The minimum lot size for an application is seven shares, which means investors can bid for a minimum of seven shares and in multiples thereof. Tentaively, the minimum amount of investment required by retail investors is ₹13,720.
5.Hyundai Motor India IPO Reservation: Half of the net public issue size (the offer less employees' reservation) has been reserved for qualified institutional buyers, of which up to 60 per cent may be allocated to anchor investors. Further, 15 per cent of shares are reserved for non-institutional investors, and the remaining 35 per cent of shares are for retail investors. The company has reserved up to 7,78,400 equity shares for its employees.
6.Lead Manager and Registrar of Hyundai Motor India IPO: The mainboard IPO's book-running lead managers (BLRMs) are Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, HSBC Securities & Capital Markets Pvt Ltd, JP Morgan India Private Limited, and Morgan Stanley India Company Pvt Ltd, whereas Kfin Technologies Limited is the key issue registrar.
7.Hyundai Motor India IPO Objectives: The promoter-selling shareholder will receive all offer proceeds after deducting offer-related costs and applicable taxes, which the promoter-selling shareholder will be responsible for paying. The company will not receive any of the offer's proceeds.
Hyundai Motor India is looking to reclaim market share from domestic rivals by expanding its SUV lineup. It also plans to launch its first India-made electric vehicle (EV) early next year and introduce at least two gasoline-powered models tailored to the market starting in 2026.
Also Read: Hyundai, Kia to launch first India-made EVs by 2025, aiming for greater footprint in local market
8.Hyundai Motor India IPO Key Risks: Increases in the prices of parts and materials required for its operations could adversely affect its business and results of operations. Hyundai Motors depends on a limited number of suppliers for parts and materials. Any interruption in the availability of parts and materials could adversely impact its operations. It majorly depends on its promoter, Hyundai Motor Company, for operations, parts, and materials.
9.Hyundai Motor India IPO Listed Peers: According to the RHP, the company's listed peers are Maruti Suzuki India (with a P/E of 17.93 as of October 4, 2024), Tata Motors Ltd (with a P/E of 11.36), and Mahindra & Mahindra (M&M) (with a P/E of 29.96). Here's how Hyundai Motor India compares with its listed peers based upon key financial metrics.
10.Hyundai Motor India Financials: In terms of financials, Hyundai Motor's revenue from operations was ₹32,488.34 crore for the nine months ending December 31, 2023. The net profit of Hyundai Motor was ₹4,382.87 crore and the profit margin was 13.5 per cent. In the three months ended June 2024, Hyundai Motor India's net profit was ₹1,489.65 crore and revenue from operations stood at ₹17,567.98 crore.
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Hyundai Motor India primarily manufacture and sell four-wheeler passenger vehicles and parts, such as transmissions and engines in India and outside India. Currently the vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs. The company provides mobility solutions, operating a network of 1,366 sales points and 1,550 service points across India.
As of March 31, 2024, the company has sold nearly 12 million passenger vehicles in India and through exports. The Indian arm of the South-Korean company been the second largest auto OEM in the Indian passenger vehicles market in fiscals 2022, 2023 and 2024 and the three months ended June 30, 2024, and also since fiscal 2009 (in terms of domestic sales volumes), according to a CRISIL report.
Hyundai Motor has been operating in India for more than two decades and is one of the few foreign automotive giants to make a mark there. US rivals Ford and General Motors have both failed to crack the local market, an AFP report noted.
Market experts say Hyundai's IPO offers potential value growth by expanding investment prospects in the underdeveloped Indian auto market. “The business's stated RoNW for FY23 was 23.48 per cent, the highest among its peers. This indicates that the company is making good use of the money provided by shareholders to create profits,” said domestic brokerage firm Master Capital Services Ltd.
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“From fiscal 2019 to 2023, the PV industry saw strong growth, with a healthy 11 per cent CAGR in industry value driven by an eight per cent CAGR in average vehicle prices and a three per cent CAGR in total sales volumes, and Hyundai is well positioned to take advantage of this growth due to their diverse offerings within the industry compared to its peers which exhibit varied financial metrics, highlighting diverse market strengths,” it added.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
