Hyundai Motor India (HMIL) is set to launch its mega-initial public offering (IPO) on Tuesday, October 15. The Rs 27,756 crore IPO, which is said to be India's biggest primary offering so far, shall be sold in the price band of Rs 1,865-1,960 apiece with a lot size of 7 equity shares and its multiples thereafter.
The issue is entirely an offer-for-sale (OFS) of up to 14,21,94,700 equity shares by its South Korean promotor Hyundai Motor Company. The bidding for the issue closes on Thursday, October 17, while the anchor book for the issue shall be announced on Monday, October 14.
The grey market premium (GMP) of Hyundai Motor India, which had plunged sharply to Rs 111 per share, has now crept higher to Rs 170. The improved premium is also signaling a single digit listing pop for the investors However, the GMP stood at Rs 270 apiece a couple of days ago, while it was somewhere around Rs 400 at the beginning of this month.
Brokerage firms, thus far, have a positive view on the issue. They believe that the company is poised for consistent growth in the long run considering its new launches, strong brand recall and focus on premiumization. However, the complete OFS sale nature and aggressive pricing may dent the sentiments for the issue.
Hyundai has ensured to maintain a stable share market in India historically. It enjoys loyalty among the Indian consumer base owing to smooth and affordable after sales service. Equipped with R&D from Korea and an automated factory in Chennai, the company has been able to optimise its operations while expanding its distribution, said Arihant Capital Markets in its IPO note.
"Hyundai also plans to gradually become a major player in the EV segment. Company has also recorded one of the highest RoNW among its peers. We believe the company can take advantage of the growing PV market in India with its diverse offerings. We have a 'subscribe for long term' rating for the issue," it added.
Hyundai’s impressive financial performance and premium product mix, especially in the SUV segment, could alter the competitive landscape in the listed space, said Saji John, Senior Research analyst, Geojit Financial Services. This could force other automakers to innovate and improve their offerings to build investors’ confidence, he said.
Investors might reallocate their portfolios based on Hyundai’s perceived growth potential and valuation, which could put downward pressure on its competitors' share price. Hyundai’s IPO being the first major auto IPO in India in over two decades could attract significant global investor interest, he added cautioning if the listing has been perceived as overvalued then it can negatively impact.
Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities & Capital Markets, JP Morgan India and Morgan Stanley India Company are the book running lead managers of the Hyundai Motor IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE on October 22.
HMIL’s current range of passenger vehicles is designed to appeal to a wide variety of customers, providing options for everyone. Their portfolio consists of 13 models across key passenger vehicle segments. HMIL is dedicated to investing in R&D and introducing new passenger vehicles to enhance their market position and increase their appeal, said Anand Rathi Research.
HMIL follows a premiumization strategy, concentrating on selling higher-end trims with a higher average selling price for their vehicles. HMIL aims to align their EV strategy with market demands in India by carefully timing the launch of suitable EV models ss various price segments. We believe that the issue is fully priced, added with a 'subscribe for long term' rating. to the IPO.
If we attribute FY25 annualized super earnings to its post-IPO fully diluted paid up equity capital, then the asking price is at a P/E of 26.73 times and based on FY24 earnings, the P/E stands at 26.28 times, said Bajaj Broking. The issue appears fully priced, but the company is poised for bright prospects post completion of its ongoing expansions, it said with a 'subscribe for long term' view.
The issue includes a reservation of 7,78,400 equity shares for the eligible employees of the company, who will get a discount of Rs 186 per share. Hyundai Motor India has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) have 15 per cent of the allocation. Retail investors will get the remaining 35 per cent.
HMIL is expected to introduce the Creta EV by end of FY25, aimed at capturing a broader consumer demographic. The company is also establishing a dedicated EV supply chain and charging infrastructure to support its long-term EV strategy, said Mirae Asset Capital. "On financial metrics, HMIL exhibits superior operating margins relative to its closest competitor," it said.
Hyundai Motor India is well-placed to ride the domestic PV sales and the capacity is being expanded to support growth in domestic and overseas markets, said Nuvama Institutional Equities. "The company is focusing on expanding its model portfolio, while localisation efforts shal improve profitability in areas of powertrain parts, transmission, ADAS parts, EV batteries etc," it added.