#HyundaiMotorIndiaIPO #HyundaiIPO #UpcomingIPO #IPO2024 #HyundaiMotor #IndianStockMarket
The initial public offering (IPO) of Hyundai Motor India (HMIL) is set to kick-off for bidding on Tuesday, October 17. The Rs 27,856 crore issue is the largest primary offering so far in the Indian stock markets. The offer price is in the range of Rs 1,865-1,960 per share, with a lot size of seven equity shares, until Thursday, October 17. It will be the first IPO by an Indian car market after the 2003 listing of Maruti Suzuki India. The South Korean parent Hyundai Motor Company took more than two decades to launch this issue, which is entirely an offer for sale of up to 14,21,94,700 equity shares. The company will command a market capitalization of about Rs 1.6 lakh crore. However, the domestic car maker is losing its steam in the grey market as the premium has been slumping gradually. Last heard, Hyundai Motor India was commanding a grey market premium (GMP) of merely Rs 65 per share, suggesting a miniscule listing pop of just 3 per cent to the investors, above the higher end of the price band. However, the premium stood above Rs 150 before the weekend, where some sources quoted a GMP of Rs 175 for the stock on Friday. However, the carnage began over the weekend, where it crashed in the two-digit figures. The GMP at the beginning of the month was around Rs 500 and was around Rs 350-375 when the issue was officially announced. OFS & valuations concerns A number of experts believe that the IPO of Hyundai Motor India is fully priced, but may deliver decent returns in the longer run considering its strong track record. Also, the entire OFS by the promoters of the company may dent its attraction as the entire sum will be flown out of South Korea with the Indian entity getting no proceeds from the issue. The rich valuations and entire OFS nature of the big issue is keeping the potential investors on the tenterhooks, who recently felt some jitters of volatility in the broader markets. Also, they are skeptical of liquidity being sucked out of the Indian markets, following the mammoth issue. It is a tendency of mega IPO to create buzz around liquidity. However, there is no shortage of liquidity in the Indian markets with a record number of SIPs and demat accounts pumping a strong amount in the equity markets. But it is the current jittery sentiments which is creating the buzz around liquidity, said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities. "Complete OFS nature should not be a concern for the investors as promoters have been investing money for the past three decades and now it's their time to pluck the ripe fruit," he added. "Also, the company shall command a premium due to its strong track record, solid financial and pedigree of the promoters. IPO sentiments continue to remain positive for the market."
Brokerage views. A report from IIFL Securities said that the company's valuations are attractive, relative to other listed OEMs in India. "Hyundai has several facets of operational superiority compared to its peers, but believes that the MPV segment is a portfolio gap, which may be addressed soon. However, a potential weakness in the PV industry in FY25 is a major concern," said the brokerage firm. Hyundai Motors India has been actively launching innovative products and refreshes; its pipeline includes a Creta EV and three other EVs, said Nuvama Institutional Equities. Globally, Hyundai has a wide portfolio of EVs and hybrids, and there is scope for launching these models in India in the future. HMIL offers 13 models in India compared with 40-plus models globally, it said. Currently, imports account for 20 per cent of the company’s COGS (cost of goods sold), but it plans to reduce this through localisation efforts, in areas of powertrain parts, automatic transmission, ADAS parts, EV batteries & more. "HMIL has acquired General Motors’ Talegaon plant, which will increase its production capacity by 0.17 million in H2FY26E and 0.08 million by FY28E," Nuvama added. The domestic PV industry is an oligopolistic market with few players dominating the entire industry. Maruti Suzuki leads the PV industry in terms of domestic sales volumes. Motor (HMIL) is the second largest contributor to the domestic sales, with 14-15 per cent market share as one of the prominent export players from India, said Sharekhan. This is due to continued traction for popular SUV models. HMIL has planned for an offer for sale under which the promoter is offloading its 17.5 per cent stake in the company. HMIL has strong parentage, relevant product profile, robust market positioning and healthy financial profile. At the upper price band, its underlying P/E valuation of 26.3 times on its FY24 earnings, it said.
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