Hyundai Motor India Ltd. (HMIL) is set to make history with its mega Initial Public Offering (IPO), anticipated to be the largest public offering ever in India, valued at ₹27,756 crore. The much-awaited IPO will be offered within a price band of ₹1,865-1,960 per share, with a lot size of seven equity shares and subsequent multiples of it, inviting both individual and institutional investors to participate in this milestone event. The company’s shares will list on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on October 22, 2023.
Key IPO Details and Dates
The Hyundai IPO opens for bids on October 15, with a three-day bidding window set to close on October 17. To ensure strong initial demand, the company’s anchor book was announced on October 14. The IPO will be a complete Offer for Sale (OFS) by Hyundai Motor Company, Hyundai’s South Korean promoter, comprising 14,21,94,700 equity shares. This offering structure reflects a unique investor opportunity, especially given Hyundai’s status and steady performance in the Indian market.
Grey Market Premium and Investor Sentiment
Hyundai’s IPO has been attracting significant interest in the grey market, where its Grey Market Premium (GMP) recently touched ₹170 per share, hinting at a promising single-digit listing pop for investors. However, the GMP has seen some fluctuation, previously peaking at ₹270 and even reaching ₹400 earlier in the month. Despite this recent volatility, brokerage firms maintain an optimistic outlook on Hyundai’s growth potential, driven by its strong brand presence, continuous innovation, and focus on premiumization within the Indian market.
Why Hyundai Motor India’s IPO Stands Out
Hyundai’s strategic expansion in India has consistently prioritized customer satisfaction, evidenced by its affordable and convenient after-sales service. With an advanced automated manufacturing facility in Chennai and R&D support from South Korea, Hyundai has managed to streamline its operations and expand its distribution networks across India effectively.
In its IPO note, brokerage firm Arihant Capital Markets acknowledged Hyundai’s successful strategies and continuous growth in India. Hyundai’s increasing emphasis on the EV segment marks its transition to becoming a key player in India’s growing electric vehicle market. Additionally, Hyundai boasts one of the highest Return on Net Worth (RoNW) ratios among its competitors, which signifies strong value generation potential for its shareholders.
Future Growth Potential: A Long-term Investment Opportunity
Hyundai Motor India’s IPO has received a “Subscribe for Long Term” recommendation from top brokerages, highlighting the potential for sustained growth. By targeting the evolving needs of the Indian passenger vehicle (PV) market, Hyundai is positioned to capitalize on the rising demand for premium cars and electric vehicles. Hyundai’s extensive product line caters to a diverse range of consumers, offering both traditional combustion engines and innovative EV options, strengthening its appeal to both Indian and global investors.
While the fully OFS nature of the IPO and its relatively aggressive pricing have raised questions among some investors, Hyundai’s substantial market share, brand loyalty, and commitment to technological advancements are anticipated to counterbalance any concerns.
Investment Impact and Market Implications
With Hyundai’s entry, the IPO market may witness a ripple effect on share prices of competitors, prompting investors to reallocate portfolios based on Hyundai’s growth potential and valuations. As the first major automotive IPO in India in two decades, this offering has already attracted significant global investor interest. However, experts caution that if Hyundai’s IPO valuation is perceived as overly ambitious, it could affect the company’s initial listing performance.
Key Players in the IPO Management Team
The IPO will be managed by a robust lineup of book-running lead managers, including Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities and Capital Markets, JP Morgan India, and Morgan Stanley India Company. The registrar for the IPO is KFin Technologies, which ensures a smooth and transparent handling of investor queries and allocations.
Final Takeaway: Hyundai’s IPO as a Transformative Market Event
The Hyundai Motor India IPO represents not only a significant financial milestone but also an opportunity for investors to support a brand with a promising trajectory in the Indian and global automotive sectors. With strong brokerage endorsements and an increasing focus on EVs, Hyundai is poised for long-term growth, offering investors a unique opportunity to be part of its journey in India’s dynamic automotive market.
