Hyundai Motor India is set to launch its initial public offering (IPO), marking a historic moment in India’s stock market. Scheduled from October 15 to October 17, the IPO will be the largest public issue in India, surpassing the Rs 21,008-crore IPO of Life Insurance Corporation (LIC) in 2022. Here’s everything you need to know.
IPO Dates and Price Band
Hyundai’s IPO will open for public subscriptions on October 15 and close on October 17, with anchor investors allowed to bid a day earlier, on October 14. The price band for the IPO has been set between Rs 1,865 and Rs 1,960 per share, valuing the automaker at approximately $19 billion (Rs 1.6 lakh crore) at the upper end of the range.
IPO Structure and Fundraising
Hyundai’s IPO is a pure offer for sale (OFS) by its South Korean parent company, Hyundai Motor Company. This means that existing shares will be sold, and no fresh equity will be issued. Through this process, Hyundai Motor India aims to raise between Rs 26,505 crore and Rs 27,856 crore by offering 14.2 crore shares to the public.
Investor Allocations
50% for Qualified Institutional Buyers (QIBs)
35% for Retail Investors
15% for Non-Institutional Investors (NIIs)
Additionally, Hyundai has allocated up to 7,78,400 shares for its employees at a discounted rate of Rs 186 per share, with this portion valued between Rs 131 crore and Rs 138 crore.
Listing and Allotment Dates
The IPO allotment will be finalized on October 18, and Hyundai’s shares are expected to list on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) by October 22, 2024.
Financial Performance and Market Position
Hyundai Motor India stands as the second-largest carmaker in India, following Maruti Suzuki. For the fiscal year 2023, the company reported an impressive revenue of Rs 60,000 crore with profits of Rs 4,653 crore. Hyundai’s valuation, pegged at up to Rs 1.6 lakh crore, highlights its significant footprint in India’s competitive automotive market.
Hyundai entered the Indian market in 1996, initially gaining popularity with its Santro hatchback. Today, the automaker offers 13 models, including best-sellers like the Creta and Venue SUVs and the Grand i10 Nios hatchback. Hyundai currently holds a 15% share of the Indian market, with a production plant in Chennai running at a high utilization rate of 94%. Hyundai’s recent acquisition of a former General Motors plant in Maharashtra could further boost its production capacity to 1 million units per year by 2026.
Broker Support and Regulatory Approvals
A team of prominent financial institutions is backing the IPO, including **Kotak Mahindra Capital**, **Citigroup Global**, **HSBC Securities**, **JP Morgan**, and Morgan Stanley. Hyundai filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in June, and SEBI granted its approval in September 2024.
Why Hyundai’s IPO Matters
Hyundai’s public listing comes at a time when Indian stock markets are at record highs, and IPO activity is flourishing. Following the LIC IPO, Hyundai’s IPO signals strong investor interest and optimism, especially within the booming automotive and manufacturing sectors.
Additionally, Hyundai’s move to go public can enhance its visibility and strengthen its brand image in India. Hyundai’s Chennai plant serves as a key export hub, shipping cars to regions like South Africa, the Middle East, and Latin America. Listing on India’s stock exchanges could increase investor confidence in Hyundai’s plans for sustained growth in both domestic and international markets.
Investor Takeaways
For potential investors, Hyundai’s IPO offers a unique opportunity to invest in India’s dynamic automotive sector. Here’s a summary of investment requirements:
Minimum Retail Investment: Rs 13,720 for a single lot.
Small Non-Institutional Investors (NIIs): A minimum of 15 lots, totaling Rs 205,800.
Large Non-Institutional Investors (NIIs): A minimum of 73 lots, totaling Rs 1,001,560.
The IPO’s current Grey Market Premium (GMP) is Rs 115, indicating a 5.87% listing gain based on strong investor sentiment. However, the GMP is subject to market fluctuations and may change leading up to the listing.
Recent IPO Trends in India
The Indian IPO market has been on a high, with record-breaking public issues like Bajaj Housing Finance’s Rs 6,560 crore IPO, which was subscribed 64 times. Hyundai’s IPO follows strong demand in recent issues, with oversubscriptions exceeding 100 times for companies like Manba Finance and Northern Arc.
Hyundai Motor India’s IPO marks a milestone as the first automaker to go public in India since Maruti Suzuki in 2003, reflecting the growing interest in the Indian stock market and making it a historic opportunity for investors.
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