Hyundai Motor India Limited (HMIL) is set to launch the biggest Initial Public Offering (IPO) in India’s history, valued at ₹27,870 crore. The IPO will open for public bidding from October 15 to October 17, 2024, with the price band set at ₹1,865 to ₹1,960 per share. Investors can bid in multiples of 7 shares, with the minimum bid being for 7 shares.
This IPO is an Offer for Sale (OFS) by Hyundai Motor Company, where 42.19 million shares will be sold. Hyundai itself will not receive any funds from the IPO. Of the total offer, 50% will be allocated to Qualified Institutional Buyers (QIBs), 15% to Non-Institutional Investors (NIIs), and 35% to retail investors.
Financial experts are largely positive about the IPO’s prospects, particularly for long-term investors. Hyundai has solidified its position as the second-largest player in India’s passenger vehicle market and is making significant strides in the electric vehicle (EV) sector. The company is expanding its production capacity, targeting 1.07 million units annually by 2028. This growth is expected to be fueled by new launches, including its flagship EV Ioniq, and the upcoming Creta EV, aimed at capturing a larger share of the market.
In terms of financial performance, Hyundai Motor India boasts superior operating margins compared to competitors like Maruti Suzuki. At the upper price band of ₹1,960, the stock is priced at a Price-to-Earnings (P/E) ratio of 26.3x FY24 EPS, which is favorable compared to Maruti Suzuki’s P/E of 30.8x. Hyundai’s strong market share (15%), especially in the SUV segment and export market, along with its top-notch EBITDA margin of 13.8%, further strengthens its outlook.
Despite a slight slowdown in the overall passenger vehicle industry, Hyundai’s plans for capacity expansion, including a 30% increase in the next two to three years, position it to meet growing demand. Financial analysts from Mirae Asset and LKP Securities have recommended subscribing to the IPO, considering it a strong player in the Indian market. They expect Hyundai to deliver competitive returns, especially as the company continues to innovate and expand in the EV space.
The Grey Market Premium (GMP) for Hyundai’s IPO is currently at ₹75, suggesting an estimated listing price of ₹2,035 per share, with an expected gain of 3.83%. The allotment of shares is expected to be finalized on October 18, 2024, with the listing of the shares anticipated on October 22, 2024. The IPO is expected to be a major milestone for Hyundai, further solidifying its position in the Indian market and beyond.
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