Hyundai Motor India IPO: Valuations, Investor Interest, and EV Plans Drive Anticipation

The highly anticipated Hyundai Motor India IPO is set to launch on October 15, marking a milestone for the country’s second-largest car manufacturer as it enters the stock market. With an estimated Rs 27,856 crore to be raised at the upper price band of Rs 1,960 per share, this initial public offering (IPO) is already drawing significant attention from both domestic and international investors.

Hyundai Motor India’s Valuation: Investor-Driven Strategy

Hyundai Motor India (HMIL) has taken a strategic approach to its IPO valuation. According to company officials, the pricing is not arbitrary but based on feedback from informed investors who have considered the company’s fundamentals, growth trajectory, and its expansive market presence. As stated by Hyundai’s COO, Tarun Garg, the firm’s market share, robust product offerings, and focus on continuous innovation have positioned it as a leader in India’s automotive landscape. Hyundai holds the second-largest market share after Maruti Suzuki, and the IPO reflects its strong financial health and growth prospects.

Garg emphasized that Hyundai’s consistent 13% EBITDA margin in FY24, along with nearly Rs 70,000 crore in revenue, makes it a solid bet for investors. He also revealed that the company will be increasing its production capacity by 30%, adding 250,000 units to its existing capacity to meet both domestic and export demand.

EV Expansion and Hyundai’s Electric Vehicle Plans

As the world shifts towards electric vehicles (EVs), Hyundai Motor India is not lagging behind. The company is planning to launch four new EV models in the current financial year. Managing Director Unsoo Kim outlined the company’s commitment to supporting EV infrastructure, particularly the charging ecosystem, which is expected to boost EV adoption in India. Hyundai’s long-term vision includes a significant expansion in the EV market by 2030.

With this in mind, the company’s aggressive push into the electric mobility space aligns with the Indian government’s focus on sustainability and reduced carbon emissions. The EV market in India, though still developing, is expected to grow significantly over the next decade, and Hyundai’s plans to introduce India-made EVs by 2026 could give the automaker a strategic edge in the future.

Brokerage Reactions: Limited Listing Gains, Strong Long-Term Prospects

While investor enthusiasm is high, several brokerage firms have taken a cautious stance on the IPO’s immediate listing gains. ICICI Direct, for instance, gave the IPO a ‘Subscribe’ rating, acknowledging Hyundai’s strong market positioning but projecting limited short-term gains. The report, however, highlighted Hyundai’s solid SUV lineup and sustained financial performance, which should provide double-digit portfolio returns in the medium to long term.

Similarly, Bajaj Broking gave a ‘Subscribe for long term’ recommendation, noting that while the IPO may appear fully priced, the company’s expansion plans and leadership in certain segments, such as SUVs and exports, make it a promising investment over time.

Moreover, the GMP (grey market premium) for Hyundai Motor India’s shares has shown some volatility. As of October 11, shares were trading at a premium of 5% in the unlisted market, with an expected listing price of Rs 2,128 per share. However, the GMP has dropped from a high of Rs 570 to Rs 168, indicating fluctuating investor sentiment as the IPO date approaches.

Financial Highlights: Growth Driven by Innovation and Market Share

Hyundai’s financials remain a crucial factor driving investor confidence. From FY21 to FY24, the company achieved a 19.4% CAGR in sales and a staggering 47.7% CAGR in profit after tax. This growth was driven by a combination of strong sales volumes and improved EBITDA margins, both of which reflect Hyundai’s competitive pricing and operational efficiency. In FY24, Hyundai maintained a 13.1% EBITDA margin, with a return on capital employed (RoCE) exceeding 50%.

Hyundai’s consistent market performance, particularly in the SUV and sedan segments, positions it well to continue its upward trajectory in the Indian market. The company currently holds a 22% market share for sedans and 18% for SUVs, making it one of the leading players in these key segments.

IPO Details: Offer for Sale and Anchor Investors

Unlike many other IPOs, Hyundai Motor India’s offering is an offer for sale (OFS), meaning that the company will not receive any of the proceeds. Instead, the funds raised, which amount to Rs 27,856 crore at the top end of the price band, will go to the parent company, Hyundai Motor Co., which is selling a 17.5% stake in its Indian subsidiary.

Despite the absence of fresh capital, investor demand remains high. Reports indicate that global institutional investors such as BlackRock Inc. and GIC Pte of Singapore have expressed interest in the offering. The anchor book for the IPO, which consists of 42.4 million shares, has already been fully allocated, with equal distribution between domestic and international institutions.

Challenges and Opportunities Ahead

While the IPO has generated excitement, it also comes at a time when the Indian automobile industry faces several challenges, including a slowdown in demand and rising inventory levels. The shift in consumer preferences toward higher-priced vehicles in the Rs 10-12 lakh range has benefited Hyundai, Tata Motors, and Mahindra, but it has posed challenges for competitors like Maruti Suzuki.

Industry experts point out that Hyundai’s ability to weather market volatility and continue expanding its SUV and EV offerings will be critical to its long-term success. The company’s commitment to innovation, market expansion, and customer satisfaction will likely keep it competitive in a rapidly evolving industry.

As Hyundai Motor India prepares for its debut on the BSE and NSE on October 22, investors will be watching closely to see how the market responds to the largest IPO in India’s history.