Hyundai IPO: Price, date, GMP, and should you go for it. All the details

Hyundai Motor India is launching the largest Initial Public Offering (IPO) in Indian history, set to open for bidding from October 15 to October 17, 2024. The ₹27,870 crore IPO will be listed on both BSE and NSE, with the price band set between ₹1,865 and ₹1,960 per equity share. The Grey Market Premium (GMP) currently stands at ₹75, indicating an estimated listing price of ₹2,035 per share, potentially offering a 3.83% gain. The IPO is entirely an Offer for Sale (OFS) of 142,194,700 shares, and Hyundai Motor Company’s stake will reduce from 100% to 82.50% post-IPO.

IPO structure and key details 

Investors can bid for a minimum of 7 shares, with the minimum retail investment being ₹13,720 and the maximum reaching ₹192,080. High-net-worth individuals (HNIs) can place bids for 105 shares or more, with larger bids potentially exceeding ₹1 million. Hyundai raised ₹8,315.28 crore from anchor investors through an allotment of 42,424,890 shares. These shares are subject to lock-in periods, with 50% locked until November 17, 2024, and the remaining shares until January 16, 2025.

The IPO allocation is divided into categories, with up to 50% reserved for Qualified Institutional Buyers (QIBs), at least 35% for Retail Individual Investors (RIIs), and 15% for Non-Institutional Investors (NIIs). The basis of allotment will be finalized on October 18 with refunds and credit of shares to Demat accounts scheduled for October 21.

The shares are expected to list on October 22.

Should you invest? Keep this in mind

Hyundai Motor India is a major player in the domestic passenger vehicle market but operates in a highly competitive environment alongside Tata Motors, Maruti Suzuki, and Mahindra & Mahindra. The competition has intensified with the entry of players like Kia Motors and MG. Investors should be mindful of potential conflicts of interest, as Hyundai operates in the same segment as Kia Corporation and Kia India, both part of Hyundai Motor Company (HMC).

Hyundai Motor India relies on its parent, HMC, for essential parts and research and development. Any strain in this relationship could negatively impact Hyundai’s business. Additionally, Hyundai pays a 3.5% royalty on revenues to HMC. Any increase beyond the SEBI-regulated cap of 5% could affect profitability and earnings per share (EPS).

Supply chain risks are also a concern. Hyundai depends on a limited number of suppliers for critical materials and parts, and any disruptions could affect production. Rising raw material costs, such as steel, could further impact Hyundai’s operating costs and profit margins.

Hyundai is expanding its production capacity, targeting 1.07 million units annually by 2028. It is also making significant strides in the electric vehicle (EV) market, with the upcoming launch of the Creta EV in FY25, in addition to its premium EV model, the Ioniq. With a strong 15% market share in India and leading EBITDA margins of 13.8% in Q1 FY25, Hyundai is well-positioned for future growth. At the upper end of the price band, the IPO is priced at a PE ratio of 26.3x FY24 earnings, which compares favorably to Maruti Suzuki’s 30.8x.

Hyundai's stock performance post-IPO will be influenced by broader market conditions. The automotive sector is currently facing inventory pile-ups and a slowdown in demand, which could affect stock valuation. However, Hyundai’s long-term prospects in both the internal combustion engine (ICE) and EV markets remain promising, making it an attractive option for long-term investors.