Update on the Hyundai India IPO – As of 10th October 2024
Today is 10th October 2024, and we are now firmly in countdown mode for what is set to be the largest IPO in Indian history, valued at Rs 27,870 crore. Since we first shared the news, there have been a few key updates worth noting.
Hyundai India is set to launch the biggest IPO in Indian history, surpassing even LIC’s record-breaking float. With an approximate price band of Rs 1,865 to Rs 1,960, this IPO has caught the attention of every investor. Up for grabs is 17.5% of the company through a sale of over 14.2 crore equity shares.We break down its key financials, Hyundai's market position, EV plans, and whether large IPOs truly succeed in India.
What is the story behind Hyundai India?
The story of Hyundai in India is nothing short of extraordinary. Launched in 1996, Hyundai Motor India Ltd. (HMIL) quickly became a household name, entering a market previously dominated by Maruti Suzuki. It was the introduction of the iconic Hyundai Santro in 1998 that changed the game. Hyundai didn’t just bring a car; it brought in global standards of quality, driving a revolution in India’s compact car segment. Today, Hyundai India stands as the country’s second-largest car manufacturer.
In terms of global roots, Hyundai Motor Company is a South Korean automotive giant valued at a whopping $47 billion. It is renowned not only for conventional vehicles but also for aggressively investing in the electric vehicle (EV) space.
Hyundai India’s Biggest IPO: How big is big?
Imagine a number so large, it makes the LIC IPO, once the largest in India, look small. Hyundai India’s IPO, with an offer for sale of Rs 27,870 crore, aims to break that record. It is positioned as the largest IPO in Indian history, making waves across the financial community.
Also Read: AFCONS Infrastructure IPO: The story of Shapoorji Pallonji's move to go public
Important Dates to Remember: When can you jump in?
Mark your calendars! The IPO opens for the anchor portion on October 14th.
For retail investors like you and me, the window to apply is from October 15th to 17th.
If all goes as per plan, Hyundai India’s listing on the stock exchanges will happen on October 22nd.
Now, the price band has been set between Rs 1,865 and Rs 1,960 per share. Not exactly pocket change, but hey, you are buying a piece of India’s second-largest carmaker!
Does Hyundai India pay dividends?
Ah, the juicy part—dividends! Hyundai India has been a consistent dividend-payer. The company has paid dividends for over a decade now, with a history of rewarding shareholders. In the last five years, dividends have ranged from Rs 20 to Rs 30 per share, depending on the financial year. However, it is worth noting that post-IPO, dividends may fluctuate based on how the company performs in the public markets.
Who is steering Hyundai India and Hyundai Korea?
Hyundai Motor India is guided by leadership team that has steered the company through several market cycles and innovations:
Unsoo Kim: The Managing Director & CEO of Hyundai Motor India, Kim took charge in 2022 and has been spearheading the company’s aggressive EV strategy. Under his leadership, Hyundai India has focused on diversifying its portfolio to meet the growing demand for SUVs and electric vehicles.
Tarun Garg: The Chief Operating Officer (COO) of Hyundai Motor India, Garg has been a key figure in Hyundai’s sales and marketing strategies. With his understanding of the Indian automobile market, he has played a role in Hyundai’s customer-centric initiatives.
On the global stage, Hyundai Motor Company in Korea is led by:
Jaehoon Chang: The President and CEO of Hyundai Motor Company. Chang has been a driving force behind Hyundai's ambitious global EV plans, overseeing the company’s investments in future mobility solutions.
Euisun Chung: The Executive Chair of Hyundai Motor Group. Chung has been at the helm of Hyundai’s long-term vision, pushing for eco-friendly technologies, autonomous driving, and smart mobility solutions.
Let us talk about Hyundai India’s products and sales
You know Hyundai, but do you know what’s driving their sales? Hyundai’s product lineup is incredibly versatile. From the budget-friendly Grand i10 and the immensely popular Creta to the premium Tucson, Hyundai cars cater to all segments.
- Hyundai Creta: One of India’s top-selling SUVs. Over 1.2 lakh units sold in FY23 alone.
- Hyundai Venue: A compact SUV that recorded over 93,000 sales in the same fiscal year.
- Santro & i10: The heart of Hyundai’s affordable segment, these cars have been household favourites for years.
But here’s the kicker—one in every four cars sold in India is a Hyundai! That’s right, Hyundai holds approximately 20% of India’s total car sales, showing its strong grip on the Indian market.
Hyundai in the EV Space: What’s the Future?
Hyundai India is fast-tracking its plans for electric vehicles (EVs). With increasing global focus on reducing carbon emissions, Hyundai’s investments in EV technology are timely. The company has already introduced the Hyundai Kona Electric, one of India’s first long-range electric SUVs. And they are not stopping there! Hyundai plans to launch more affordable EVs in India, aiming to capture a growing slice of the EV pie.
Do Large IPOs succeed in India? Let’s look at the top 5 biggest IPOs
India has seen some colossal IPOs over the years, but bigger isn’t always better. Here’s a look at the five biggest IPOs in Indian history and how they performed post-listing:
- LIC IPO (Rs 21,000 crore): Listed with high hopes, but saw a tepid response initially, down by nearly 8% on listing day.
- Paytm IPO (Rs 18,300 crore): An even bigger disappointment. Listed at a steep discount, and to this day, the stock hasn’t recovered to its IPO price.
- Coal India IPO (Rs 15,200 crore): A success story! Despite global market volatility, Coal India rewarded its investors well, with consistent dividends and a stable stock price.
- Reliance Power (Rs 11,700 crore): Remember this disaster? Listed at Rs 450, it once traded for less than Rs 10.(CMP - Rs 45)
- Zomato IPO (Rs 9,375 crore): Zomato has had its ups and downs, but for now, it trades above its listing price, with investors betting on its long-term potential.
The lesson? Big IPOs don’t always guarantee big returns, and you should do your homework before jumping in.
How does Hyundai India stack up against Maruti Suzuki, Tata Motors, and M&M?
Hyundai India’s closest competitors in the market are Maruti Suzuki, Tata Motors, and Mahindra & Mahindra (M&M). Here is a quick comparison:
- Maruti Suzuki: The undisputed leader in the Indian market with a 40% market share. Maruti has the first-mover advantage and dominates the small-car segment. But Hyundai competes fiercely in the SUV segment, which is a growing category.
- Tata Motors: Tata has made a name for itself with a strong lineup of EVs and affordable cars, but it still trails behind Hyundai in terms of overall market share and brand recall.
- Mahindra & Mahindra (M&M): While M&M is a beast in the SUV and commercial vehicle segments, Hyundai holds its own in the urban and family car categories.
What about Kia? Is there a relationship?
Yes! Hyundai and Kia are related—almost like siblings. Hyundai Motor Company owns a significant stake in Kia, and both brands share platforms, technology, and even suppliers. That is why you will notice similarities between models like the Hyundai Creta and Kia Seltos. They may compete in the same market, but in many ways, they are part of the same family.
What is good about the Hyundai IPO? And what’s not?
Positives:
- Strong Market Share: Hyundai is the second-largest car manufacturer in India, with a significant 15% market share.
- Diverse Product Line: From budget cars to premium SUVs, Hyundai has a diverse portfolio.
- EV Push: Hyundai’s investments in EV technology position it well for future growth.
Negatives:
- Offer for Sale: All the money raised from the IPO will go to the promoters in Korea, not the Indian entity. The company won’t retain any capital from the IPO for growth.
- Global Instability: With global markets in turmoil and geopolitical tensions on the rise, this IPO could be impacted by external factors.
Why should You Read the DHRP carefully?
Before making any investment decision, I cannot stress this enough—read the Draft Red Herring Prospectus (DHRP) thoroughly. The DHRP contains crucial details about the company’s financials, risks, and how they plan to use the proceeds. In this case, since it’s an offer for sale, the funds will go directly to the promoters, with none being retained for Hyundai India’s operations.
This article isn’t financial advice. It is just information to help you make an informed decision. Always do your research and consult with a financial advisor if you have doubts.
Hyundai India’s financials
For the fiscal year ending 2023, Hyundai India reported:
- Revenue: Rs 60,670 crore
- Net Profit: Rs 4,210 crore
- EBITDA Margin: 18%
Hyundai India’s balance sheet shows a healthy cash reserve, which speaks to its financial stability. However, given that the IPO proceeds will go directly to the Korean promoters, the question arises—will this cash-rich company be able to continue its current growth trajectory without fresh capital infusion?
Hyundai India: Where Are Its Cars Manufactured?
Hyundai India has a robust manufacturing presence, with two state-of-the-art plants located in Sriperumbudur and Irungattukottai in Tamil Nadu. These facilities are vital for producing Hyundai’s popular cars like the Creta, i20, Santro, and Venue. Combined, these plants have an annual production capacity of 750,000 vehicles, underscoring the company’s stronghold on both the domestic and export markets.
Hyundai India’s Exports: A global footprint
Hyundai India is not just a key player in the domestic market, but it also has an export arm. The company exports to over 90 countries, including markets in Africa, the Middle East, Latin America, and the Asia-Pacific region. In fact, Hyundai India is one of the leading automobile exporters in India. As of 2023, it shipped more than 1.3 lakh cars, contributing substantially to its global operations.
What is the Impact of Global Unrest on the IPO markets?
It is no secret that global markets are jittery. From the Russia-Ukraine war, genocide in Gaza, to the volatile crude oil prices, global unrest could impact this IPO. Any further instability could lead to lower-than-expected investor participation, affecting the listing day performance. So keep an eye on the global news ticker!
Indian Four-Wheeler market: What is the big picture?
India’s four-wheeler market is one of the fastest-growing in the world. With rising disposable incomes and urbanisation, the demand for passenger vehicles is set to rise. The market grew by 12% in 2023, with SUVs accounting for a large chunk of that growth. Hyundai India, with its strong presence in the SUV segment, is well-positioned to benefit from this demand surge.
But it hasn’t all been smooth sailing. Rural demand has been tepid due to inflationary pressures. The future will depend on how effectively manufacturers like Hyundai can navigate rising interest rates, supply chain issues, and changing consumer preferences.
However, a word of caution—the high tax rates on cars in India (as much as 28% GST) could dampen consumer demand in the long run.
Motilal Oswal view
Is Hyundai India’s IPO for you?
The Hyundai India IPO is making headlines for a reason—it is big, bold, and coming at a time when India’s car market and IPO market is buzzing. But large IPOs don’t always translate into big gains for investors. History shows that while some IPOs like Coal India have performed well, others like Reliance Power have been disasters.
This IPO is purely an offer for sale, meaning none of the funds raised will be used for Hyundai India’s expansion or growth. All the money will go to the promoters in South Korea. So, before making any decision, it is crucial to weigh the risks and benefits and, of course, read the DHRP carefully.
FAQs
1. What is the Hyundai India IPO price band?
The price band for the IPO is set between Rs 1,865 and Rs 1,960 per share.
2. When does the Hyundai India IPO open?
The IPO opens on October 14th for anchor investors and from October 15th to 17th for retail investors.
3. How much money will the IPO raise?
Hyundai India’s IPO aims to raise Rs 27,870 crore, making it the largest IPO in Indian history.
4. Will Hyundai India use any of the IPO proceeds for growth?
No, this IPO is an offer for sale, meaning all proceeds will go to the promoters in South Korea.
5. How does Hyundai compare to its competitors in India?
Hyundai holds a 15% market share, second only to Maruti Suzuki, and is a leader in the SUV and compact car segments.
Who are the key leaders at Hyundai India and Hyundai Korea?
In India, Hyundai is led by Unsoo Kim, MD & CEO, and Tarun Garg, COO. Globally, Jaehoon Chang is the President & CEO of Hyundai Motor Company, while Euisun Chung is the Executive Chair of Hyundai Motor Group.
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Tushar Mangl writes on business, finance, mental health, food, leisure and a greener, better society. Speaker, author of Hey Honey Bunch, Ardika and I Will Do It.
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