Hyundai Motor India IPO 2024 :- Comprehensive Overview

Hyundai Motor India has officially launched its Initial Public Offering (IPO), becoming one of the most significant IPOs in India’s history. With the issue open for subscription from October 15 to October 17, 2024, the IPO aims to raise a massive ₹27,870 crore, signaling Hyundai’s ambition to solidify its growth in India’s automotive market. The shares will be listed on the BSE and NSE exchanges, with the listing date tentatively set for October 22, 2024

IPO Structure and Key Financial Details

Issue Type: The IPO is structured as a pure Offer for Sale (OFS), meaning the existing shareholders are divesting part of their stake, and no new funds will be infused into the company. After the IPO, Hyundai Motor Company’s ownership will decline from 100% to 82.5%
Price Band: The shares are priced between ₹1,865 and ₹1,960 per share.
Grey Market Premium (GMP): As of October 17, the GMP stands at ₹75, suggesting a potential listing price of ₹2,035 per share, implying a modest gain of 3.8% on the upper band
Subscription Categories and Investment Requirements:

Retail Investors: A minimum bid is set at 7 shares (₹13,720), with the maximum investment limit at ₹192,080 per retail investor.
Qualified Institutional Buyers (QIBs): Allocated 50% of the IPO, with subscriptions already exceeding 6.23 times the reserved portion.
High-Net-Worth Individuals (HNIs): Must apply for 105 shares or more, with their category subscribed 0.43 times as of the closing day
Employees: A special quota of 778,400 shares has been reserved for Hyundai’s employees, offered at a discount of ₹186 per share

Hyundai has already raised ₹8,315 crore from anchor investors by allocating 42.4 million shares, with the anchor allotment subject to lock-in periods of 1-3 months

Business Model and Strategic Vision

Localization and Expansion Plans

Hyundai Motor India operates with a robust focus on localization—nearly 93% of its components are sourced domestically. The company has two key manufacturing hubs:

Chennai Plant – Currently operating at 97.1% utilization.
Talegaon Plant (Maharashtra) – Recently acquired and expected to begin operations in 2026, this facility will increase Hyundai’s total production capacity to 1.07 million units annually

Hyundai’s market strategy emphasizes premiumization and electrification, reflecting its shift toward Electric Vehicles (EVs). The company is working to develop a localized EV supply chain, supporting its ambition to launch multiple EV models in the Indian market

Product Portfolio and Market Position

Hyundai India offers a diversified product range spanning hatchbacks, sedans, and SUVs, including models such as the i20, Creta, Tucson, and the IONIQ 5 EV. As of FY24, the company’s market presence accounts for approximately 87% of the passenger vehicle market segments in India

Hyundai faces strong competition from Maruti Suzuki, Tata Motors, and Mahindra & Mahindra.

Financial Performance and Valuation

Hyundai India has shown consistent financial growth over the past few years:

FY21: ₹41,404 crore revenue, ₹1,881 crore profit.
FY24: ₹71,302 crore revenue, ₹6,060 crore profit

The company reported a strong EPS (Earnings per Share) of ₹62.56 over the past three years and a high Return on Net Worth (RoNW) of 39.1%, showcasing its financial robustness. At the upper price band of ₹1,960 per share, Hyundai seeks a market cap of ₹159,258 crore, with a valuation that places its price-to-revenue ratio at 2.28x

Should You Invest?

Investment analysts offer mixed recommendations for Hyundai's IPO.

Long-term Potential: Hyundai's solid business strategy, focus on EVs, and expanding manufacturing capacity make it a strong contender for long-term investors.
Short-term Returns: The modest GMP suggests limited short-term listing gains, making it less attractive for short-term speculators
Expert Opinions: Brokerages like Choice Equity Broking have recommended the IPO for long-term investments, given Hyundai’s established market presence and profitability.

This IPO is primarily aimed at unlocking Hyundai’s valuation through market listing, rather than raising capital for future projects. Investors should align their expectations accordingly, focusing on Hyundai’s long-term growth trajectory in India’s evolving automobile market.

Important Dates and Allotment Process

IPO Open: October 15, 2024
IPO Close: October 17, 2024
Allotment Announcement: October 18, 2024 (via KFin Tech and BSE websites)
Listing Date: October 22, 2024

In conclusion, Hyundai Motor India’s IPO represents a significant opportunity for investors seeking exposure to a leading automotive player in India. While short-term listing gains may be limited, Hyundai's long-term growth potential, especially in premium and electric vehicles, could make it a compelling investment for patient investors.