Hyundai Motors IPO

Hyundai Motor India IPO: Key Insights and Analysis

Hyundai Motor India Ltd. (HMIL) is gearing up for its Rs 28,000 crore IPO, marking the first public issue by an automobile company in India in over two decades since Maruti Suzuki’s 2003 listing. This IPO will be a significant event in the Indian market, as it involves entirely a sale of existing shares (Offer-for-Sale), with no fresh issue.

However, the company’s grey market premium (GMP) has experienced a sharp 75% crash in the last two weeks, reflecting concerns about street sentiment ahead of the IPO.

Grey Market Premium (GMP) Drop

As of October 9, 2024, Hyundai Motor India’s GMP has fallen to Rs 140-145, down from Rs 570 in late September. This steep decline indicates a moderation in demand for the IPO shares in the unofficial market. The GMP is often seen as an early signal of investor appetite, although it is important to note that it remains unregulated and may not directly correlate with the official listing performance.

Hyundai India’s Growth and Financials

Despite the volatility in GMP, Hyundai Motor India remains a strong player in the Indian market. Some key financial highlights include:

• Net profit for the fiscal year ending March 2024 was Rs 6,060 crore, up 28.7% year-on-year.
• Revenue grew by 15.8% to Rs 69,829 crore in FY 2024.

Hyundai India contributes 6.5% to global revenue and 8% to global profitability. Despite these figures, analysts project the company could be valued at around 42% of the parent company’s market capitalization upon listing, signaling its importance in Hyundai’s global business.

IPO Details

1. IPO Size: Rs 28,000 crore (entirely Offer-for-Sale)
2. Price Band: Rs 1,865-1,960 per share
3. Valuation: At the upper end of the price band, Hyundai Motor India is valued at Rs 1.6 lakh crore.
4. Public Offer Dates:
   • Subscription opens: October 15, 2024
   • Subscription closes: October 17, 2024
   • Anchor investor bidding: October 14, 2024
5. Offer Structure: 1.42 crore equity shares by promoter Hyundai Motor Company, no fresh issue component.

Market Expectations and Outlook

Based on current market trends and analysis from firms like Aequitas Investments, Hyundai shares could list at a modest 7% premium, depending on market conditions. This suggests a potential listing price at the higher end of the price band. However, with the drop in GMP, investors should be cautious, as market sentiment may shift closer to the listing date on October 22.

Hyundai Motor India’s Chief Operating Officer, Tarun Garg, remains optimistic about the company’s prospects, citing the strong growth potential in the Indian market and the higher valuations that local units of global companies often command.

Key Considerations

• Entirely an Offer-for-Sale: Since the IPO is entirely an OFS, Hyundai Motor India itself will not receive any proceeds. This could be a concern for investors expecting fresh capital to fuel the company’s growth.
• GMP Trends: The sharp fall in GMP suggests market caution. While grey market activity is an early indicator, it may not fully reflect the actual listing price.
• Valuation and Growth: Despite contributing a small portion to Hyundai’s global revenue, Hyundai India’s expected market valuation highlights the company’s robust position in the Indian auto market, where it remains the second-largest carmaker after Maruti Suzuki.

Conclusion

Hyundai Motor India’s IPO is a significant event in the Indian stock market, with its Rs 28,000 crore offering marking the first major listing in the automobile sector in over 20 years. While the sharp fall in GMP suggests a cooling of initial excitement, the company’s strong financial performance and potential for long-term growth in India make it an attractive consideration for investors.

FAQs

1. What is the size of Hyundai Motor India’s IPO?
   The IPO is valued at Rs 28,000 crore, consisting entirely of an Offer-for-Sale (OFS).
2. What is the grey market premium (GMP) for Hyundai Motor India’s IPO?
   As of October 9, 2024, the GMP for Hyundai Motor India shares stands at Rs 140-145, marking a 75% drop from late September.
3. What are the public issue dates for Hyundai Motor India IPO?
   The IPO opens for subscription on October 15, 2024, and closes on October 17, 2024. Anchor investors can place bids on October 14, 2024.
4. Will Hyundai Motor India receive proceeds from the IPO?
   No, since the IPO is entirely an Offer-for-Sale, Hyundai Motor India will not receive any proceeds from the listing.
5. What are Hyundai Motor India’s key financial figures?
   Hyundai Motor India posted a net profit of Rs 6,060 crore and revenue of Rs 69,829 crore for FY 2024, with a 28.7% and 15.8% YoY growth, respectively.

Hyundai Motors IPO

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