Hyundai Motor India Limited IPO:
The much-anticipated ₹27,870 crore initial public offering (IPO) of Hyundai Motor India Limited (HMIL), a subsidiary of Hyundai Motor Global, opened for subscription on October 15, 2024, and will remain available for investors until October 17, 2024. The IPO consists entirely of an Offer for Sale (OFS), where the parent company, Hyundai Motor Global, will offload 14.2 crore shares (142,194,000 equity shares). The price band for the IPO has been set between ₹1,865 and ₹1,960 per share, with a face value of ₹10.
Key Highlights of Hyundai Motor IPO:
- IPO Dates: October 15 to 17, 2024
- Issue Size: ₹26,505 – ₹27,856 crore
- Offer for Sale (OFS): 14.2 crore shares
- Price Band: ₹1,865 – ₹1,960 per share
- Grey Market Premium (GMP): Initially at 3.3% but falling to 2% after the issue announcement
- P/E Valuation: 26x FY24 earnings, compared to Maruti Suzuki’s 29x
- Retail Investor Subscription: 37% by day 2
- Qualified Institutional Buyers (QIBs): Subscribed 45% of their reserved portion
Subscription Status as of October 16, 2024:
As of day 2, the IPO was 42% subscribed, with 4.17 crore shares bid against 9.97 crore available shares. Retail investors have been leading the subscription process, accounting for 37% of the total subscription so far, followed by non-institutional investors at 23%. Qualified institutional buyers (QIBs) have bid for 45% of the shares reserved for them.
Grey Market Premium (GMP) Update:
Prior to the IPO opening, the shares of Hyundai Motor India were trading at ₹65 in the unlisted market, representing a small premium of 3.3% over the IPO price. However, as the IPO opened, the GMP fell to 2%, indicating a weakening sentiment among investors in the grey market.
IPO Outlook:
According to research from LKP Research, Hyundai Motors India is well-positioned due to the launch of new models, including the much-awaited Creta EV. Despite some challenges in the global automotive sector, Hyundai’s valuation, priced at 26x FY24 earnings, is competitive compared to Maruti Suzuki’s 29x earnings valuation. Given Hyundai’s strong market positioning, product line, and parentage, LKP Research recommends subscribing to the IPO for long-term gains.
However, Aequitas Research offers a more cautious outlook, citing broader challenges in the global automotive industry and signs of an economic slowdown in India. This could limit the upside potential for Indian investors.
Competitive Landscape and Market Potential:
Hyundai Motors India enjoys strong brand recognition and a robust portfolio in the Indian market, making it a key competitor to Maruti Suzuki. Its aggressive product lineup and ongoing push into the electric vehicle (EV) market with models like the Creta EV position it for significant growth. The IPO is set to be one of India’s largest, surpassing the ₹21,000 crore Life Insurance Corporation (LIC) IPO from 2022, and one of Asia’s largest IPOs in recent times.
The Hyundai Motor India IPO has garnered significant attention due to its sheer size, set to be one of the largest IPOs in Indian history. Retail investors have shown strong interest, subscribing to 37% of the issue by day two, demonstrating their confidence in the company’s long-term growth potential. Despite the falling Grey Market Premium (GMP), which has dropped to 2%, market analysts remain optimistic about Hyundai’s future prospects, particularly with its entry into the electric vehicle (EV) space and its competitive pricing relative to industry peers like Maruti Suzuki. Investors are watching closely as the IPO nears its final subscription day, with expectations that institutional buyers will further drive up demand.
Hyundai Motor India’s ₹27,870 crore IPO is poised to make a significant mark in the Indian market. While the initial grey market premium and subscription figures indicate moderate enthusiasm, the company’s competitive pricing (26x FY24 earnings) and growth potential in the EV sector make it a promising investment for long-term investors. The IPO’s subscription has been driven largely by retail and QIB investors, with a current GMP of 2%. Given Hyundai’s strong market positioning, solid financial profile, and competitive valuation, experts like LKP Research recommend subscribing to the IPO, while others urge caution due to macroeconomic factors.
Also, read more: Hyundai Motor India Receives SEBI Nod for IPO; Plans to Divest 15-20% Stake
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