Hyundai IPO 2024 Highlights: Hyundai Motor India IPO GMP falls to less than 1%, issue subscribed 42% on Day-2

The grey market premium (GMP) for the Hyundai Motor IPO has seen a slight uptick since the first day of bidding. As of October 16, the GMP stands at Rs 63, suggesting an estimated listing price of Rs 2,023, which includes the cap price and the current premium. This reflects an expected gain of 3.21% per share upon listing.

Waaree Energies, one of India‘s leading solar panel manufacturers, has announced the price band for its upcoming Initial Public Offering (IPO), which will open for subscription on October 21. The price band has been set between Rs 1,427 and Rs 1,503 per equity share. Investors can place bids starting with a minimum lot of nine shares, with additional bids in multiples of nine.

“The PV (passenger vehicle) industry is slightly in a slow lane currently, this may augur well for the company, as HMI (Hyundai Motor India) is expanding its capacity by 30% in the next 2 to 3 years. With new model launches (4 in mid-term, including the new Creta EV), HMI should give a strong fight to its rivals. At the upper end of the price band, on FY 24 earnings, the stock should trade at 26x times which is a fair value as compared to its closest peer Maruti Suzuki (29x FY 24 earnings). Therefore, on all favourable parameters, we assign a SUBSCRIBE rating on the stock. We recommend investing in this stock over the long term for higher returns,” said LKP Securities in a research report.

The issue received bids worth Rs 4,356.37 crore in total as of day 2. The retail buyers bidded for Rs 3,181.29 crore while there was a lack of interest from non-institutional buyers which bidded for Rs 731.39 crore.

Through the acquisition of a manufacturing plant in Talegaon, Maharashtra, the HMIL (Hyundai Motor India) plans to increase its production capacity from 824,000 units in FY24 to 1,074,000 units per annum, aided by a calibrated approach with HMC. At the upper price band of Rs 1,960, HMIL is available at a premium valuation of 26.7x P/ E ratio based on FY25 post-issue annualised EPS.

The IPO of Hyundai Motor India‘s employee segment was fully booked on the second day. However, the issue has been subscribed to 0.22 times in total. the retail part was booked 0.32 times while the NII segment was subscribed 0.17 times.

At the close of the first day of bidding, the Hyundai Motor India IPO recorded an overall subscription of 18%, with bids for 1.77 crore equity shares compared to the total offer of 9.97 crore shares, as per data from the National Stock Exchange (NSE).

Breaking down the subscriptions by category, the retail investors’ portion was well-received, achieving a 26% subscription rate. In contrast, the Non-Institutional Investors (NII) segment saw a subscription of 13%. The Qualified Institutional Buyers (QIBs) category lagged behind with a subscription rate of just 5%. Notably, the employee portion garnered significant interest, achieving a robust subscription rate of 79%.

Hyundai Motor India Ltd (HMIL) has reported impressive growth in its financial performance, with sales and profit after tax (PAT) increasing at compound annual growth rates (CAGRs) of 19.4% and 47.7%, respectively, from FY21 to FY24. This growth is driven by an 11% CAGR in sales volume and a consistent improvement in the EBITDA margin profile. The company achieved an EBITDA margin of 13.1% in FY24, with a return on capital employed (RoCE) of 50%. At the upper end of its IPO price band, HMIL will command a valuation of 26x P/E, approximately 16.5x EV/EBITDA, and around 2.3x P/S based on FY24 metrics, which is slightly below the valuation of industry leader Maruti Suzuki India, according to ICICI Direct Research in an IPO note.

At the upper price band of Rs 1,960, Hyundai Motor India is available at a premium valuation of 26.7x P/ E ratio based on FY25 post-issue annualised EPS. “We assign a “Subscribe” rating to the issue for the long-term investment, given its strong parentage with HMC, healthy financial profile, sustained earnings, increased product mix in the SUV segment and enhanced focus towards Electric Vehicle space,” said Geojit Financial Services in an IPO note.

In the past two years, the PV (passenger vehicle) market experienced significant growth, but recently demand has slowed. Inventory levels at showrooms have risen from 28 days to 70 days, indicating a potential imbalance between supply and demand. The upcoming festive season will be the key monitorable for gauging the sustained expansion of the domestic PV market. At the higher price range, Hyundai Motor India is seeking a P/E ratio of 25.6x, which is in line with its peer average. Thus the issue is fully priced.

The company has successfully established “Hyundai” as a trusted brand in India. Its Creta model held a 38% market share in the mid-size SUV segment. Over the period, HMIL has significantly expanded its presence in the SUV segment, which now accounts for 67.41% of its total domestic sales. The company has historically reported profitable business growth and consistently paid dividends. “Further, with capacity expansion, new PV launches and a focus on premiumization, the company is well-placed to benefit in the long term. Thus considering the above observations, we assign a “Subscribe for Long Term” rating for the issue,” said Choice Equity Broking in an IPO note.

The issue looks reasonably priced at the upper price band compared to Maruti Suzuki, which is trading at 29.8x. “We expect Hyundai India to be a key beneficiary of growth in the PV segment due to its strong presence in the SUV segment,” said Motilal Oswal. The company has planned an overall capex of Rs 32,000 crore to develop capabilities in EVs (including battery assembly and charging stations) and ramp up overall manufacturing capacity over FY23-32. The brokerage firm has given a “subscribe” rating to the issue with a “long-term” view.

The brokerage firm met with Hyundai India’s managing director Unsoo Kim, CFO Wangdo Hur, and COO Tarun Garg. During the meeting the management said that the company is well placed to ride the domestic PV sales upcycle with 63% exposure to high-growth UVs (utility vehicles). Also, the company is increasing capacity from 0.82 million to 1.07 million units to support growth in domestic and overseas markets. Thirdly, the company’s focus is on expanding the model portfolio, with four EVs planned over the next few years. They are also considering launching some global models in India. Nuvama doesn’t have any rating on the stock.

Incorporated in May 1996, Hyundai Motor India Limited is part of the Hyundai Motor Group, the world’s third-largest auto original equipment manufacturer (OEM) based on passenger vehicle sales. The company produces and sells reliable, feature-rich, and innovative four-wheeler passenger vehicles, utilizing the latest technology. It also manufactures key components, including transmissions and engines.

Hyundai Motor India offers mobility solutions through a vast network of 1,366 sales points and 1,550 service points across the country. As of March 31, 2024, the company has sold nearly 12 million passenger vehicles domestically and via exports.

Hyundai Motor India Limited has set the price band for its upcoming IPO at Rs 1,865 to Rs 1,960 per equity share, with a face value of Rs 10 each. The cap price represents 196 times the face value, while the floor price stands at 186.5 times the face value. The cap price is at least 105% of the floor price but does not exceed 120%, providing a pricing range for investors as the company gears up for its highly anticipated public debut.

The Hyundai Motor India IPO is an entirely offer-for-sale of 14.2 crore equity shares by its parent company, Hyundai Motor Company. The auto giant aims to raise Rs 27,870.2 crore through its maiden public issue at the upper price band. Additionally, the company has reserved 7,78,400 equity shares for its employees, who will receive these shares at a discount of Rs 186 per share to the final issue price.

Hyundai Motor India’s mega initial public offering (IPO) was subscribed 18% on its first day, with bids for 17.8 million shares against the 99.8 million shares on offer. The Rs 27,870-crore IPO, the largest public issue in the country, will remain open for subscription until Thursday. By the end of Day 1, the retail investors’ portion was subscribed 26%, non-institutional investors (NIIs) subscribed 13%, while qualified institutional buyers (QIBs) subscribed 5% of the shares allocated to them.

At present, all passenger vehicles and parts are manufactured exclusively at the Chennai plant. Any interruptions or stoppages in production, including at the Talegaon facility once it becomes operational, could have a detrimental impact on the company’s overall performance and financial health.

In the fast-paced and highly competitive automotive market, Hyundai Motor India may face challenges in maintaining its competitive edge, which could negatively affect its operations.

With the company’s production facilities running at near-full capacity, the successful launch of the Talegaon plant is critical to meeting future demand. A misjudgment in demand forecasting could lead to either underutilization or overutilization of manufacturing resources, potentially disrupting production timelines and driving up costs.

Hyundai Motor India posted a net profit of Rs 6,060.04 crore for the financial year 2024, reflecting a nearly 29% growth compared to the Rs 4,709.25 crore profit recorded in the previous year. In FY23, the company had reported a significant 62.3% increase in net profit, rising from Rs 2,901.59 crore in FY22.

Hyundai Motor India‘s IPO witnessed strong demand across various investor categories. The subscription for Qualified Institutional Buyers surged by 0.5 times, while Non-Institutional Investors saw a 0.13 times increase in subscriptions. Shares allocated to Retail Individual Investors were oversubscribed by 0.26 times, and those reserved for employees saw an oversubscription of 0.80 times.

Hyundai Motor India (HMI) is part of the Hyundai Motor Group, the third-largest automotive original equipment manufacturer (OEM) globally in terms of passenger vehicle sales in 2023. HMI benefits from significant support from Hyundai Motor Company (HMC) across various operational areas. From 2014 to June 2024, HMC has invested a total of ₹1,875.03 billion in global research and development, including in new mobility sectors like electrification, shared mobility, and autonomous driving technologies.

HMC’s strong research and development capabilities, combined with access to information on emerging global trends and consumer preferences, enable them to swiftly respond to customer demands. Their extensive export network, spanning over 190 countries, plays a crucial role in generating revenue and improving profitability. Additionally, the company benefits from the strength of the “Hyundai” brand. According to Interbrand’s “Best Global Brands 2023,” Hyundai’s brand value saw an 18% year-on-year increase, reaching ₹1,695.57 billion in 2023, making it the 32nd most valuable brand in the world—up three places from 2022.

HMI has cultivated strong relationships with other affiliates within the Hyundai Motor Group, driving synergies in supply chains, manufacturing, and product development. Group companies such as Mobis India Ltd provide spare parts and accessories to dealers, while Glovis India Pvt Ltd handles end-to-end transportation of passenger vehicles to various destinations, including dealerships and stockyards.

Hyundai Motor India Ltd (HMI) is a subsidiary of Hyundai Motor Group, the world’s 3rd largest auto original equipment manufacturer (OEM) by passenger vehicle sales in CY2023. Since Fiscal 2009, HMI has held the position of the 2nd largest auto OEM in the Indian passenger vehicle market based on domestic sales volumes. The company is known for producing and selling reliable, feature-rich, and technologically advanced 4-wheeler passenger vehicles. Their diverse portfolio includes 13 models across various segments, including sedans, hatchbacks, SUVs, and battery electric vehicles (EVs).

The Hyundai Motor IPO has been subscribed at 0.18 times as of October 15, 2024, 7:02:07 PM. The retail category showed a subscription of 0.27 times, while the QIB category was at 0.05 times, and the NII category stood at 0.13 times. For live day-by-day subscription details, please check the current status.

Morgan Stanley India Company Pvt Ltd

Incorporated in May 1996, Hyundai Motor India Limited is a part of the Hyundai Motor Group, which is the third largest auto original equipment manufacturer (“OEM”) in the world based on passenger vehicle sales.

The company manufactures and sells reliable, feature-rich, and innovative four-wheeler passenger vehicles backed by the latest technology. The company also manufactures parts such as transmissions and engines.

The company provides mobility solutions, operating a network of 1,366 sales points and 1,550 service points across India.

As of March 31, 2024, the company has sold nearly 12 million passenger vehicles in India and through exports.

The issue size of the Hyundai Motor India IPO is Rs 278.7 billion consisting entirely of Offer For Sale shares by promoters and promoter group as selling shareholders. The Profit After Tax (PAT) grew at 45 per cent CAGR over FY22-24. The company has delivered good returns at 33 per cent Return on Equity and 33 per cent Return on Capital Employed.