Hyundai Motor India is gearing up to enter the stock market with a highly anticipated Initial Public Offering (IPO), expected to launch between October 14 and 16, 2024. This IPO is projected to raise around $3 billion, potentially making it the largest public offering in India’s history, eclipsing the previous record set by LIC’s IPO in 2022. This significant development comes amidst a backdrop of fluctuating market dynamics caused by geopolitical tensions in the Middle East, which have somewhat influenced investor sentiment.
Key Details About the Hyundai Motor India IPO
Hyundai Motor India Limited (HMIL) has received the necessary approvals from the Securities and Exchange Board of India (SEBI) to commence its IPO. The company aims to leverage its robust market presence as the second-largest car manufacturer in India, capturing nearly 15% of the domestic car market share. This IPO will consist of an offer for sale by its parent entity, Hyundai Motor Company, which plans to divest 15-20% of its equity stake.
Hyundai Motor IPO Timeline and Structure
- IPO Opening Date: Expected between October 14-16, 2024
- Issue Size: Approximately ₹25,000 crores (around $3 billion)
- Price Band: To be announced shortly prior to the opening date
- Retail Investor Quota: Up to 35%
- Qualified Institutional Buyers (QIB) Quota: Up to 50%
- Non-Institutional Investors (NII) Quota: Up to 15%
The final price band will be finalized in consultation with lead managers, featuring prominent global banks such as JP Morgan and Citi. The shares are set to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Investment Opportunities and Risks
Investors are closely monitoring this IPO due to Hyundai’s impressive financial trajectory and strategic initiatives. The company’s ongoing revenue growth, driven by a popular lineup of SUVs and substantial investments in electric vehicles (EVs), positions it favorably for future expansion. However, potential investors should remain cautious of risks such as market volatility and fierce competition from local rivals, including Maruti Suzuki and Tata Motors.
Benefits of Investing in Hyundai Motor IPO
- Market Leadership: As a prominent player in the Indian automotive sector, Hyundai’s established brand recognition is likely to attract a strong investor base.
- Growth Potential: The company’s commitment to expanding its electric vehicle portfolio is aligned with the global shift toward sustainable transportation solutions.
- Strong Financials: Hyundai has consistently demonstrated revenue growth, indicating a robust business foundation and financial health.
Risks Involved
- Market Conditions: The IPO’s success is closely linked to overall market sentiment, which can be unpredictable and volatile.
- Competition: Intense rivalry from other automobile manufacturers may exert pressure on Hyundai’s market share and profit margins.
- Regulatory Changes: Shifts in government policies or tax regulations can potentially impact operational outcomes.
How to Invest in the Hyundai Motor IPO
Individuals interested in participating in this IPO can follow the steps outlined below:
- Open a Demat Account: Ensure you possess a Demat account with a registered broker.
- Stay Updated: Attend to announcements regarding the precise price band and subscription timelines.
- Apply Online: Utilize your broker’s platform to apply for shares once the subscription window opens.
- Monitor Allotment Status: After submission, verify your allotment status through your broker’s website or application.
Hyundai Motor IPO Promoter Holding
Hyundai Motor India Limited (HMIL) is preparing to launch its transformational Initial Public Offering (IPO) comprising a complete offer for sale by its promoter, Hyundai Motor Company. This IPO is poised to be among the largest ever in India, with plans to sell approximately 142,194,700 equity shares, indicating 17.50% of HMIL’s total equity share capital post-IPO.
Promoter Holding Details
- Promoter: Hyundai Motor Company, headquartered in South Korea, serves as the sole promoter and selling shareholder for this IPO.
- Share Offer: The complete offering of 142,194,700 shares will originate from Hyundai Motor Company, which aims to amplify its visibility and brand image through this public opportunity.
- Valuation Target: The IPO seeks a valuation of approximately ₹25,000 crores (about $3 billion), a targeted goal intended to outstrip the previous record held by LIC of India.
- Use of Proceeds: It’s important to highlight that Hyundai Motor India Limited will not receive any financial gains from this sale, as all capital raised will go directly to the promoter.
Market Impact and Future Projections
The forthcoming IPO is anticipated to redefine the competitive framework of India’s automotive industry. With additional capital dedicated to public investment, Hyundai plans to boost its manufacturing capabilities and extend its product range, particularly in the EV segment. Analysts forecast that this move could catalyze further innovation among existing competitors as they recalibrate their strategies to sustain market share.
Hyundai’s decision to transition into the public domain is deemed a strategic maneuver to counteract the so-called “Korea discount,” where South Korean firms typically face lower valuations than their global peers. By separately listing its Indian subsidiary, Hyundai aims to unlock greater valuations and attract a more diverse investor pool.
About Hyundai Motor India Limited
Hyundai Motor India Limited (HMIL), a wholly-owned subsidiary of South Korea’s Hyundai Motor Company, was established on May 6, 1996. It has emerged as a substantial presence in the Indian automotive market, recognized for producing a variety of vehicles including sedans, hatchbacks, SUVs, and electric vehicles (EVs). As of FY 2024, HMIL commands nearly 15% of the domestic automobile market, ranking as the second-largest manufacturer in India, just behind Maruti Suzuki.
Company Overview
Hyundai Motor India commenced its operations with the launch of the Hyundai Santro in September 1998, which rapidly gained traction and solidified the brand’s standing in India. Over time, HMIL has broadened its product selection to feature 13 different models and has built a strong sales and service network, boasting 1,366 sales outlets and 1,550 service centers across India as of December 31, 2023.
Market Position
Hyundai is recognized as the largest exporter of passenger vehicles from India since 2005, having sold nearly 12 million passenger vehicles through both domestic sales and exports since its inception until March 31, 2024. This strong market presence is underpinned by advanced manufacturing practices and access to cutting-edge technology within the Hyundai Motor Group.
Financial Performance
Hyundai Motor India’s financial health is illustrated by its steady revenue growth trajectory. As a leading Original Equipment Manufacturer (OEM) in India, the company was ranked as the world’s third-largest auto OEM based on passenger vehicle sales in 2023. Despite encountering challenges such as seasonal demand variations and competition from brands like Kia (also owned by Hyundai), HMIL’s strategic initiatives have solidly positioned it for future growth.
| Period Ended | 31 Dec 2023 | 31 Mar 2023 | 31 Mar 2022 | 31 Mar 2021 |
| Assets | 32,488.34 | 34,573.34 | 28,358.06 | 26,730.57 |
| Revenue | 53,298.09 | 61,436.64 | 47,966.05 | 41,404.65 |
| Profit After Tax | 4,382.87 | 4,709.25 | 2,901.59 | 1,881.16 |
| Net Worth | 19,777.92 | 20,054.82 | 16,856.26 | 15,311.34 |
| Reserves and Surplus | 18,965.38 | 19,242.28 | 16,043.71 | 14,498.8 |
| Total Borrowing | 784.48 | 1,158.6 | 1,140.03 | 1,341.75 |
Strategic Goals
The objective behind pursuing this Initial Public Offering (IPO) is to raise ₹25,000 crores by offering around 142 million equity shares. This maneuver aims to augment the company’s visibility and brand equity while facilitating liquidity through public listing. The IPO has the potential to be one of the largest in Indian history, surpassing existing records set by companies like LIC and PayTM.
