Hyundai IPO GMP Allotment status Highlights: Latest information on GMP, allotment, listing, and price band

Industry experts attributed the lackluster response from retail investors and NIIs to the sharp decline in Hyundai’s grey market premium (GMP). The GMP fell from Rs 380 a month ago to zero on Thursday, significantly dampening retail investor enthusiasm. This drop in GMP played a critical role in weakening demand from smaller investors.

The QIB portion of Hyundai‘s IPO was subscribed 6.97 times, bolstered by strong interest from foreign institutional investors. However, bids from retail investors and NIIs were much weaker, with retail subscription at just 50% and NIIs at 60%. In contrast, the portion reserved for employees saw healthier engagement, being subscribed 1.74 times.

Hyundai Motor India’s massive Rs 27,870-crore IPO was fully subscribed on Thursday, largely driven by strong buying interest from Qualified Institutional Buyers (QIBs). Despite being oversubscribed 2.37 times, the IPO saw limited participation from Non-Institutional Investors (NIIs) and retail investors, with the company receiving bids for 236.3 million shares compared to the 99.8 million shares on offer.

As of 17:21 IST on the third day of subscription, the Hyundai Motor India IPO has been oversubscribed by 2.37 times, according to BSE data.

The initial share sale attracted bids for 23,63,29,191 shares, compared to 9,97,69,810 shares available for sale.

– The retail investor segment has seen a 50% subscription.

– Non-institutional investors have subscribed at a rate of 60%.

– The qualified institutional buyers (QIBs) portion has been particularly strong, with a subscription rate of 6.97 times.

– Additionally, the employee portion has been subscribed 1.74 times.

As of June 30, 2024, Hyundai Motor India‘s market capitalization stands at Rs 1,59,258.06 crore. Key performance indicators include a Return on Capital Employed (ROCE) of 13.69%, Return on Net Worth (RoNW) of 12.26%, and a Price-to-Book Value (P/BV) ratio of 14.93.

As of June 30, 2024, Hyundai Motor India reported total assets of Rs 25,370.24 million and revenue of Rs 17,567.98 million. The company posted a profit after tax of Rs 1,489.65 million, leading to a net worth of Rs 12,148.71 million. Reserves and surplus amount to Rs 11,336.17 million, while total borrowings remain relatively low at Rs 758.14 million.

The Hyundai Motor IPO is priced within a range of Rs 1,865 to Rs 1,960 per share, with a face value of Rs 10. This implies a market capitalization of approximately Rs 15,92,580 million. The minimum market lot for retail investors is set at 7 shares. The IPO will open on October 15, 2024, and close on October 17, 2024. The company’s total number of shares stands at 812,541,100 before and after the issue.

As part of the Hyundai Motor Group, Hyundai Motor India benefits from early access to global automotive technologies, including cutting-edge IT services through Hyundai Autoever. Hyundai Autoever offers services in passenger vehicle IT, smart manufacturing, mobility services, data security, and enterprise IT solutions. Hyundai Autoever’s “smart factory” platform allows Hyundai to implement flexible, automated manufacturing processes for customized vehicle production.

The Hyundai Motor India IPO will be listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), with Kotak Capital, Citigroup, HSBC Securities, JP Morgan India, and Morgan Stanley acting as the Book Running Lead Managers (BRLMs). KFin Technologies is the designated registrar. Before the IPO, Hyundai’s promoters held 100% of the company’s shares, which will decrease to 82.50% post-issue, with the public owning 17.50%.

Hyundai Motor India is a subsidiary of the Hyundai Motor Group, the third-largest auto original equipment manufacturer (OEM) globally based on passenger vehicle sales in 2023. It benefits from Hyundai Motor Corporation’s (HMC) extensive support across various operational areas. HMC has invested approximately Rs 1,875.03 billion in global research and development (R&D) from 2014 to June 2024, focusing on key emerging mobility areas such as electrification, shared mobility, and autonomous driving.

Investors in the Hyundai Motor India IPO can place bids starting with a minimum of 7 shares, with additional bids in multiples of this amount. For retail investors, the minimum investment is 1 lot (7 shares) costing Rs 13,720, and the maximum investment is 14 lots (98 shares) for Rs 1,92,080. Small High Net-Worth Individuals (S-HNI) can apply for a minimum of 15 lots (105 shares) at Rs 2,05,800, while the maximum they can invest is 72 lots (504 shares) for Rs 9,87,840. For Big High Net-Worth Individuals (B-HNI), the minimum investment is 73 lots (511 shares) for Rs 10,01,560.

Hyundai Motor India IPO has raised Rs 8,315.28 crore from anchor investors, with the anchor bid date scheduled for October 14, 2024. A total of 42,424,890 shares have been allocated to anchor investors. The lock-in period for 50% of the anchor shares will end on November 17, 2024, with the remaining shares locked in until January 16, 2025.

Hyundai Motor India has remitted Rs 15,435.84 crore to its parent company in Seoul, South Korea. Earlier, during FY23, the company also declared a dividend payment of nearly Rs 1,500 crore to Hyundai Motor Company (HMC). This has raised concerns among investors, especially as the company reported a net profit of Rs 6,060.04 crore and revenue of Rs 69,829.05 crore for FY24. The dividend payout represents 22% of the total revenue for the fiscal year, sparking worries about the company’s financial strategy.

“The issue in Hyundai IPO is the high valuation for such a large issue. Even after managing a full subscription, there is a high probability of the stock listing below the issue price,” said V K Vijayakumar, Chief Market Strategist at Geojit Financial Services.

“The PV (passenger vehicle) industry is slightly in a slow lane currently, this may augur well for the company, as HMI 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 an IPO note.

Hyundai Motor India pays 3.5% of sales revenue to HMC. “Under the Royalty Agreement, to use HMC’s trademarks in connection with such manufacturing and selling activities, we are required to pay an amount to HMC equal to 3.5% of our sales revenue (which is to be determined as set forth in the Royalty Agreement), arising from the sale of passenger vehicles or parts,” it told the markets’ watchdog through RHP.

The IPO received bids worth Rs 44,468.92 crore as of 3 pm on October 17. The qualitative institutional buyers placed buds of Rs 37,483.43 crore, subscribing to the issue 6.76 times.

The IPO of Hyundai Motor India was subscribed 2.22 times, which was driven by the QIB subscription of 6.6 times more than the offered shares. The employees also subscribed to the issue 1.64 times. However, there was lacklustre demand from both retail and NIIs, with subscriptions not crossing even 50%.

“HMIL aims to align their EV strategy with market demands in India by carefully timing the launch of suitable EV models across various price segments,” said Anand Rathi Research in an IPO note.

The IPO of Hyundai Motor India has been fully subscribed. However, the retail and NII portions do not even get booked 50%. The IPO was highly subscribed by the QIBs, 5.25 times more than the offered shares.

“HMIL (Hyundai Motor India) is dedicated to investing in R&D and introducing new passenger vehicles to enhance their market position and increase the appeal of their vehicles to customers. They aim to remain a key player in the Indian automobile market, offering options that cater to buyers across the entire range, from affordable to premium segments. HMIL follows a premiumization strategy, concentrating on selling higher-end trims with a higher average selling price (ASP) for their respective passenger vehicles,” said Anand Rathi Research in an IPO note.

Hyundai Motor India IPO was subscribed 0.90 times as of 12.53 pm on Day 03. The IPO has received bids worth a total of Rs 17,508.55 crore. The retail segment was booked 0.43 times while the employee category has been oversubscribed. The issue has been oversubscribed by QIBs with a subscription rate of 2 times the offered shares.

“If we attribute FY25 annualized super earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 26.73, and based on FY24 earnings, the P/E stands at 26.28,” said Bajaj Broking. The issue relatively appears fully priced, but the company is poised for bright prospects post-completion of its ongoing expansions.

Hyundai Motor India paid out Rs 15,435.84 crore to the parent company in Seoul, South Korea. Earlier in FY23, the company rolled out a dividend payment of almost Rs 1,500 crore to HMC. This is a worry for investors because the company in FY24 reported a net profit of Rs 6,060.04 crore and a revenue of Rs 69,829.05 crore. So, the dividend payout was 22% of the total revenue in FY24.

In Q2 FY25, the total passenger vehicle sales declined by almost 20% on year compared to a year ago in the same quarter, according to the data presented by the automobile industry SIAM. “Passenger Vehicles and Commercial Vehicles posted some degrowth in Q2 of FY25 compared to FY24. Heavy rainfall in key states and almost the entire ‘Shradh’ period falling in the month of September, did impact the sales numbers of some of the segments,” said Shailesh Chandra, President of SIAM.

The overlapping business activities of Kia Corporation and Kia India Private Limited, which are part of the same group, may lead to potential conflicts of interest that could negatively affect Hyundai Motor India.

Hyundai is asking for a price-to-earnings (PE) valuation of 26x FY25 earnings, while Maruti Suzuki is trading at a PE of 22x its FY25 earnings. This PE ratio is also above the industry average of 24.41x and significantly higher than its parent company Hyundai Motor Global’s PE of 5x.

“Hyundai’s impressive financial performance and premium product mix, especially in the SUV segment, could alter the competitive landscape in the listed space. This could force other automakers to innovate and improve their offerings to build investors’ confidence. Investors might reallocate their portfolios based on Hyundai’s perceived growth potential and valuation, which could put downward pressure on its competitors’ share price,” said Saji John, Senior Research analyst at Geojit Financial Services.

As of June 30, 2024, the financials show total assets of Rs 25,370.24 million and revenue of Rs 17,567.98 million. The company reported a profit after tax of Rs 1,489.65 million, with a net worth of Rs 12,148.71 million. Reserves and surplus stand at Rs 11,336.17 million, while total borrowing remains low at Rs 758.14 million.

As of 10:09 AM on October 17, 2024, Hyundai Motor India‘s IPO has been subscribed 0.43 times. The Qualified Institutional Buyer (QIB) portion is subscribed 0.58 times, the Non-Institutional Investor (NII) portion 0.27 times, and the retail investor portion 0.40 times. Shares reserved for employees are subscribed 1.38 times. The issue closes today.