Hyundai Motor India IPO: A Landmark Event in the Indian Primary Market
The initial public offering (IPO) of Hyundai Motor India Limited has officially launched, marking a significant moment in the Indian primary market. Open for subscription from October 15 to October 17, 2024, this IPO is poised to be one of the largest in the country’s history, with the auto original equipment manufacturer (OEM) aiming to raise ₹27,870.16 crore through an entirely Offer for Sale (OFS) mechanism. This means that the proceeds from the IPO will not contribute to the company’s balance sheet, as they will be distributed among existing shareholders.
Pricing and Subscription Details
Hyundai Motor India has set the price band for its IPO between ₹1865 and ₹1960 per equity share. As of the second day of bidding, the IPO has been subscribed 42%, with a total of 4,17,33,328 shares bid against 9,97,69,810 shares on offer. The subscription breakdown reveals that the retail investor segment has seen a 38% subscription rate, while non-institutional investors have subscribed at 26%. Qualified Institutional Buyers (QIBs) have shown a robust interest, with their portion booked at 58%. The employee segment has also performed well, being subscribed 1.30 times.
On the first day of bidding, the IPO had a slow start, with overall subscriptions at just 0.18 times. However, the momentum picked up significantly on the second day, indicating growing investor interest.
Grey Market Performance
Interestingly, Hyundai Motor India shares are currently trading in the grey market at a premium of ₹65, suggesting positive sentiment among investors. This premium can often serve as an indicator of expected demand and market confidence in the IPO.
Key Dates and Logistics
- IPO Opening Date: October 15, 2024
- IPO Closing Date: October 17, 2024
- Allotment Date: Expected on October 18, 2024
- Listing Date: Anticipated on October 22, 2024, on both BSE and NSE
- Lot Size: Investors can apply in lots, with one lot comprising seven shares.
KFin Technologies has been appointed as the official registrar for the IPO, while a consortium of lead managers, including Kotak Mahindra Capital Company, Citigroup Global Markets, and J.P. Morgan, will oversee the offering.
Investment Perspective: To Apply or Not?
Analysts have varied opinions on whether investors should subscribe to the Hyundai Motor India IPO. Gaurav Garg, a research analyst at Lemonn Markets, has given the IPO a ‘subscribe’ tag, highlighting Hyundai’s operational efficiency and strong financial performance. The company has demonstrated a remarkable revenue CAGR of 19.4% from FY21 to FY24, alongside a return on capital employed (RoCE) exceeding 50% in FY24.
Master Capital also recommends a ‘buy’ stance, noting Hyundai’s plans to expand its passenger vehicle portfolio and increase its electric vehicle (EV) market share. The company’s strategy to premiumize its offerings and focus on efficient capital allocation further strengthens its investment case.
Conversely, Shivani Nyati from Swastika Investment has cautioned that while the IPO is fully priced, it may limit potential upside for investors. Given that the IPO is an OFS, the lack of proceeds going to the company could pose challenges for substantial listing gains.
Several other brokerage firms, including Aditya Birla and ICICI Direct, have echoed similar sentiments, advising a ‘subscribe’ tag for long-term investors willing to navigate potential initial listing challenges.
Conclusion
The Hyundai Motor India IPO represents a pivotal moment for both the company and the Indian automotive sector. With strong financials, a commitment to innovation, and a robust market presence, Hyundai is well-positioned for future growth. Investors looking for long-term opportunities in a leading automotive brand may find this IPO appealing, despite the inherent risks associated with large public offerings. As always, potential investors are encouraged to conduct thorough research and consult with financial advisors before making investment decisions.