Hyundai Motor India IPO: A Comprehensive Overview
Hyundai Motor India is set to make waves in the Indian stock market with its Initial Public Offering (IPO) scheduled to open on Tuesday, October 15, and close on Thursday, October 17. The anticipation surrounding this IPO is palpable, as it marks a significant event in the automotive sector. The company has fixed the price band for its shares between ₹1,865 and ₹1,960 per equity share, with a face value of ₹10. The allocation details for anchor investors will be disclosed on Monday, October 14.
A Brief History of Hyundai Motor India
Established in May 1996, Hyundai Motor India Limited operates as a subsidiary of the Hyundai Motor Group, which is recognized as the third-largest original equipment manufacturer (OEM) globally in terms of passenger vehicle sales. The company is headquartered near Chennai and boasts a manufacturing facility capable of producing its entire range of vehicle models. Hyundai is renowned for its technologically advanced, reliable, and feature-rich passenger vehicles, including sedans, hatchbacks, SUVs, and electric vehicles (EVs).
Hyundai’s diverse portfolio includes popular models such as the Grand i10 NIOS, i20, AURA, Elantra, Venue, Creta, and the all-electric SUV, Ioniq 5. The company has successfully sold nearly 12 million passenger vehicles in India and through exports to regions including Africa, the Middle East, and neighboring countries like Bangladesh, Nepal, Bhutan, and Sri Lanka.
Understanding the Grey Market Premium (GMP)
As the IPO date approaches, the grey market premium (GMP) for Hyundai Motor India shares has emerged as a crucial indicator of investor sentiment. Currently, the GMP stands at +₹165, suggesting that shares are trading at a premium in the grey market. This implies that the estimated listing price could be around ₹2,125 per share, representing an 8.42% increase over the upper end of the IPO price band.
However, it’s important to note that the GMP has shown fluctuations over the past 15 sessions, with a recorded low of ₹0 and a high of ₹570. The grey market premium reflects investors’ willingness to pay above the issue price, providing insights into market expectations.
IPO Details and Structure
The Hyundai Motor Company plans to offer 14.2 crore equity shares in an offer-for-sale, with no fresh issue component included in the IPO. The merchant bankers managing this IPO include prominent names such as Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities and Capital Markets (India), JP Morgan India, and Morgan Stanley India Company. KFin Technologies will act as the registrar for the IPO.
Valuations and Market Sentiment
While the Hyundai Motor India IPO has generated considerable interest, analysts have expressed mixed views regarding its potential for Indian investors. Aequitas Investments has raised concerns about valuation mismatches and broader sector challenges, suggesting that the IPO may not be as favorable as initially perceived. The report highlights that Hyundai’s India unit, which contributes only 6.5% of global revenues and 8% of profitability, is expected to be valued at approximately 42% of the parent company’s market capitalization upon listing.
Nuvama Institutional Equities also provided insights, indicating that the parent company is likely to offload a 17.5% stake. They project that Hyundai Motor India’s profit after tax (PAT) for the first nine months of FY24 was ₹44 billion, with expectations of growth leading to a PAT of ₹68 billion by FY27. However, they caution that earnings growth may be limited, factoring in increased royalty payments and reduced other income due to a significant dividend payout.
Conclusion
The Hyundai Motor India IPO represents a pivotal moment for the company and the Indian automotive market. As investors prepare to make decisions, it is essential to consider the insights from analysts and the prevailing market conditions. With the IPO opening soon, potential investors should stay informed and consult with financial experts to navigate this significant investment opportunity.
For ongoing updates and detailed analysis, investors can follow business news platforms and financial analysts to make informed decisions as the IPO date approaches.