Hyundai Motor India IPO: Hyundai Motor India Ltd, the Indian arm of South Korean automaker Hyundai, is going to launch its initial public offering (IPO) on October 15. It will be concluded on October 17. The issue will be opened for anchor investors on October 14. The price band of the much-awaited 28,000-crore initial share-sale has been fixed at Rs 1,865-1,960 per share.
This IPO marks a significant milestone for the Indian auto industry, as it is the first automaker’s initial share sale in over two decades, following Japanese automaker Maruti Suzuki’s listing in 2003.
Hyundai Motor India IPO: Opening Date & Price
The IPO will be opened for public subscription on October 15 and closed on October 17. The IPO will be opened for anchor investors on October 14.
The price band of the IPO has been fixed in the range of Rs 1,865 to Rs 1,960 per share.
Hyundai Motor India IPO: What Analysts Say
Brokerage firm Master Capital Services Ltd in its note said, “Hyundai Motor is the second largest carmaker in India after Maruti Suzuki India. In comparison to Maruti Suzuki, Tata Motors, and other competitors, Hyundai Motor India is thought to be stronger as a result of the listing since it may make financing in the future simpler even though the company is not going to utilize the IPO proceeds directly for the company. The business’s stated RoNW for FY23 was 23.48%, the highest among its peers. This indicates that the company is making good use of the money provided by shareholders to create profits.”
From Fiscal 2019 to 2023, the PV industry saw strong growth, with a healthy 11% CAGR in industry value driven by an 8% CAGR in average vehicle prices and a 3% CAGR in total sales volumes and Hyundai is well positioned to take advantage of this growth due to their diverse offerings within the industry as compared to its peers which exhibit varied financial metrics, highlighting diverse market strengths, it added.
“Hyundai’s IPO offers potential value growth by expanding investment prospects in the underdeveloped Indian auto market,” Master Capital Services stated.
Hyundai Motor India IPO Size
The Hyundai Motor India IPO, which is valued at about Rs 27,870 crore, will be the largest in India since the Rs 21,000 crore IPO of Life Insurance Corporation of India (LIC).
Hyundai Motor India’s proposed Rs 28,000-crore IPO is entirely an offer-for-sale (OFS) of 142,194,700 equity shares of the face value of Rs 10 each by promoter Hyundai Motor Company, with no fresh issue component, according to the draft red herring prospectus (DRHP) filed in June.
Hyundai Motor India IPO: GMP Today
According to market observers, unlisted shares of Hyundai Motor India Ltd are trading Rs 115 higher in the grey market than its issue price. The Rs 115 grey market premium or GMP means the grey market is expecting a 5.87 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Hyundai Motor India IPO: Minimum Investment
The minimum investment required by retail investors to bid for one lot of Hyundai Motor IPO is Rs 13,720. The minimum lot size investment for small NII is 15 lots or 105 shares, aggregating up to Rs 205,800, and for big NII, it is 73 lots or 511 shares, aggregating up to Rs 1,001,560.
Hyundai Motor India IPO: A Complete Offer for Sale
The Hyundai Motor India IPO is completely an offer for sale (OFS). It means the existing promoters are offloading their equity in the market, and no fresh equity will be floated.
The South Korean parent is diluting some of the stake through the OFS route. Since the public issue is completely an OFS, Hyundai Motor India Ltd, which is the second largest carmaker in India after Maruti Suzuki India, will not receive any proceeds from the IPO.
The automaker received approval from the Securities and Exchange Board of India (Sebi) on September 24 to float its IPO.
In its draft papers, Hyundai Motor India stated that it expects that the listing of the equity shares “will enhance our visibility and brand image and provide liquidity and a public market for the shares”.
Hyundai Motor India IPO: More Details
Hyundai Motor India commenced operations in India in 1996 and currently sells 13 models across segments.
In its draft papers, Hyundai Motor India said, “Further, our Company expects that listing of the Equity Shares will enhance our visibility and brand image and provide liquidity and a public market for the Equity Shares in India.”
Hyundai set up its India operations in 1996, starting off with the Santro hatchback, once its most sold car. Hyundai holds India’s no.2 carmaker spot, coming in behind Maruti Suzuki. It currently has a roughly 15% share in the country’s competitive car market. It sold 614,721 cars in India and exported 163,155 units in the year to March 2024
Hyundai has one factory outside of Chennai in southern Tamil Nadu state, also dubbed the Detroit of Asia. The factory has a capacity of 824,000 units per year and is running at a utilisation rate of 94%, leaving little room for growth that would help compete with Maruti Suzuki.
Hyundai aims to reach production of about 1 million units a year with the acquisition of a former General Motors plant in western Maharashtra state. The plant is expected to start operations only by the second half of the year to March 2026.
Hyundai has 1,377 dealers across India. In India, the carmaker sells 13 models, with the ‘Creta’ and ‘Venue’ sport utility vehicles as well as the ‘Grand i10 Nios’ hatchback among its top-selling models.
Hyundai’s current factory is also a key export hub, which manufactures cars that are shipped to South Africa, the Middle East as well as Latin America.
Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital and Morgan Stanley are the investment banks advising on the transaction and law firm Shardul Amarchand Mangaldas is the company counsel. Cyril Amarchand Mangaldas is the banks’ counsel and Latham and Watkins is acting as the international counsel.
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