Hyundai Motor India IPO Live Updates: A Landmark Event in the Indian Automotive Sector
Today marks a significant milestone in the Indian financial landscape with the launch of the Hyundai Motor India IPO. As a wholly-owned subsidiary of Hyundai Motor Company, Korea, Hyundai Motor India has established itself as a key player in the Indian automobile market since its inception in 1996. Known for its popular models such as the i20, Creta, and Venue, the company has garnered a reputation for quality and innovation.
Initial Subscription Performance
The Hyundai Motor India IPO has seen a promising start, with an 18% subscription on its first day, according to data from the Bombay Stock Exchange (BSE). The breakdown of subscriptions reveals that retail investors accounted for 26% of the portion, while non-institutional investors subscribed to 13%. Qualified institutional buyers (QIBs) made up 5% of the total subscriptions, and the employee portion saw an impressive 80% uptake.
The IPO is positioned as an attractive opportunity for investors interested in the automotive sector, especially given Hyundai’s expanding market presence in India. Bidding for the IPO commenced today, October 15, 2024, and will continue until October 17, 2024.
Pricing and Issue Size
The price band for the Hyundai Motor India IPO has been set between ₹1,865 and ₹1,960, with a minimum investment requirement of ₹13,055 for a lot of 7 shares. The projected issue size stands at a staggering ₹27,870.16 crore, making it one of the largest IPOs of the year. Notably, Hyundai Motor India Ltd secured ₹8,315.28 crore from 225 anchor investors at ₹1,960 per share just a day prior to the IPO launch, which included participation from 21 domestic mutual funds across a total of 83 schemes.
Manufacturing Capacity and Expansion Plans
Hyundai Motor India operates three manufacturing facilities in India, located in Irrungattukottai and Sriperumbudur in Tamil Nadu, and a newly acquired plant in Talegaon, Pune. The Talegaon plant, which was taken over from General Motors India in December 2023, is expected to gradually commence operations, with the first phase slated to begin in the second half of FY26.
Once operational, the combined production capacity of the Chennai and Talegaon plants is anticipated to reach 994,000 units, with the potential to increase to approximately 1.1 million units when fully operational. The company aims to position the Chennai manufacturing plant as a hub for electric vehicle and SUV production, maintaining a capacity utilization rate of over 90% while balancing domestic sales and exports.
Market Insights and Analyst Opinions
Vinit Bolinjkar, Head of Research at Ventura Securities, expressed optimism about Hyundai’s prospects, citing a significant shift in consumer preference from small cars to SUVs. He noted that the planned capacity expansion would benefit the company as it anticipates increased volumes and substantial growth in exports. However, he also cautioned that the valuations appear aggressive.
Similarly, Elara Capital highlighted several advantages for Hyundai, including a larger proportion of SUVs compared to competitors like Maruti Suzuki, robust powertrain and transmission capabilities, and healthy margin and return ratios. They recommend a "Subscribe" tag for the IPO.
Business Model and Product Portfolio
Hyundai Motor India’s business model is built on strong parentage, cutting-edge technology, and a commitment to localization. The company offers a diverse range of 13 passenger vehicle models, including sedans, hatchbacks, SUVs, and electric vehicles. Notably, the Creta has emerged as a leader in the mid-SUV segment in India, contributing significantly to the company’s sales.
As of June 30, 2024, Hyundai operated 1,377 sales outlets and 1,561 service centers across India, marking a substantial increase from previous years. This extensive network positions Hyundai as the second-largest player in the Indian market based on customer touchpoints.
Risks and Considerations
The red herring prospectus (RHP) for the IPO outlines several risks, including potential increases in the prices of essential parts and materials, conflicts of interest with group companies like Kia, and ongoing dealings with Hyundai Motor Company that could impact operations.
Despite these challenges, analysts remain optimistic about Hyundai’s long-term growth potential, particularly in the context of India’s evolving automotive landscape, which is increasingly leaning towards electrification.
Conclusion
The Hyundai Motor India IPO represents a significant opportunity for investors looking to tap into the growing automotive sector in India. With a strong brand presence, a diverse product portfolio, and ambitious expansion plans, Hyundai is well-positioned to capitalize on the evolving market dynamics. As the subscription period unfolds, all eyes will be on the performance of this landmark IPO, which could set the tone for future offerings in the Indian market. Stay tuned for the latest updates on subscription status, grey market premium (GMP), and expert reviews as this exciting journey continues.