WATCH | All you need to know about Hyundai Motor's IPO

Hyundai Motor’s IPO : Hyundai Motor India is set to make history with its highly anticipated initial public offering ( IPO ), marking the first time an automaker has gone public in India since Maruti Suzuki ’s 2003 debut. 

The offering is expected to raise up to Rs 27,870 crore, making it potentially the largest IPO in India’s history and the second-largest globally in 2024.

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Key Details of the IPO

Issue Dates: Retail and other investors can place orders between October 15 and 17.

Price Band: Shares are priced between Rs 1,865 and Rs 1,960.

Offer Structure: The IPO is entirely an Offer for Sale (OFS), with Hyundai Motor Group, the South Korean parent company, reducing its stake in Hyundai Motor India from 100 per cent to 82.5 per cent. In an OFS, existing shareholders sell their shares to the public, and no new shares are issued. Hence, the proceeds will go to the selling shareholders, not the company.

Key Investors and Demand

Anchor investors, including BlackRock and Singapore’s sovereign wealth fund, have already invested Rs 8,315 crore, indicating strong demand ahead of the public offering.

Hyundai’s Financial Performance

Hyundai Motor India’s financial performance has been robust despite challenges in the auto sector. For the quarter ending June 30, 2024, the company posted revenue of Rs 17,567.98 crore and a net profit of Rs 1,489.65 crore. Over the past two years, its revenue has grown at a compound annual growth rate (CAGR) of 21 per cent, with profits rising by 45 per cent.

Hyundai holds a 15 per cent market share in India, second only to Maruti Suzuki , and is betting on future growth through a strong SUV lineup and expansion into electric vehicles (EVs), including the planned launch of the Creta EV in FY25. Additionally, the company’s expansion of its Talegaon facility in Maharashtra will help boost production capacity for both domestic and export markets.

Broader Implications for the Auto Sector

Hyundai’s IPO comes at a time of strong growth in India’s automotive sector, but also amid challenges such as rising raw material costs and shifting consumer preferences. 

Despite these pressures, the company’s listing signals confidence in India’s capital markets. Already, over $9 billion has been raised through IPOs in 2024, indicating strong market appetite. Analysts believe that Hyundai’s IPO could encourage other automakers and large corporations to explore public listings.

Risks and Competition

While Hyundai’s IPO has generated excitement, investors should consider risks, including rising competition from players like Tata Motors and newer entrants such as Kia Motors. Additionally, Hyundai relies on its parent company for some components, paying a 3.5 per cent royalty fee, which could impact profits.

Analyst Ratings and Outlook

The IPO has been rated “Subscribe for Long Term” by analysts, who view its competitive pricing as appealing. Hyundai’s strong financials, growing market share, and ambitious plans in the EV space position it as an attractive investment for long-term investors.

What’s Next?

The allotment for Hyundai’s IPO is expected to be finalised on October 18, with the company’s stock expected to list on October 22. Investors and industry watchers alike will be closely monitoring Hyundai’s stock performance post-listing, as it could set a benchmark for future IPOs in the Indian automotive and broader corporate landscape.