Hyundai Motor India IPO: How the auto major compares with listed peers on valuation, key financial metrics

Estimated read time 16 min read

The upcoming IPO could surpass the record set by the Life Insurance Corp (LIC) of India’s $2.46 billion issue in May 2022, making it the largest in the country’s history. The Indian arm of the South Korean automaker Hyundai Motor Co., is currently the second-largest carmaker in India after Maruti Suzuki India.

Also Read: Hyundai Motor India looks to raise $2.5 billion in potentially India’s largest IPO

Hyundai Motor India IPO Details

Bankers privy to the IPO suggest that the carmaker aims to raise approximately $2.5 – $3 billion through the upcoming issue, valuing the company at $25-30 billion. The proposed IPO is entirely an offer for sale (OFS) of 142,194,700 equity shares by Hyundai Motor Company, with no fresh issue component, according to the DRHP.

Hyundai Motor India will offer up to 142.2 million equity shares for the IPO, representing 17.5 per cent of the post-offer paid-up equity share capital. Since the public issue is completely an OFS, Hyundai Motor India will not receive any proceeds of the IPO. The auto major intends to offer 35 per cent of the total equity on OFS in the IPO to the retail individual investors.

Also Read: Hyundai, Kia to launch first India-made EVs by 2025, aiming for greater footprint in local market

In its draft papers, Hyundai Motor India said it expects that the listing of the equity shares “will enhance our visibility and brand image and provide liquidity and a public market for the shares”. Kotak Mahindra Capital Co Ltd, Citigroup Global Markets India Pvt. Ltd., HSBC Securities and Capital Markets (India) Pvt. Ltd., JP Morgan India Pvt. Ltd., and Morgan Stanley India Co. Pvt. Ltd. are the book-running lead managers (BRLMs) of the proposed public issue.

The DRHP has not provided any timeline for the listing, but typically SEBI takes three to six months to approve, reject or seek more information on IPOs. With the IPO, Hyundai aims to unlock value for its Indian arm and help the Korean automaker shed its valuation discount compared to global and Asian peers.

Hyundai Motor India: Comparison with listed peers

Hyundai Motor India Ltd, the second largest carmaker in India after Maruti Suzuki India. The upcoming IPO will make it the country’s first car maker to go public in two decades since Maruti Suzuki in 2003.

The listing is seen putting Hyundai Motor India on a stronger footing compared to Maruti Suzuki, Tata Motors and other rivals as it could make future fundraising easier, without the need for dependency on its Korean parent.

Hyundai Motor India said it plans to focus on “premiumisation”- selling more expensive cars, as well as increasing its EV market share and adding charging stations, where it lags behind Tata Motors. Hyundai India also said it wants to ship more cars, “strengthening” its position as an export hub.

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Hyundai Motor India IPO: Comparison of Hyundai Motor India with its listed peers Maruti Suzuki India, Tata Motors, and M&M (Source: DRHP filed by Hyundai Motor India)

Hyundai Motor India Ltd commenced operations in India in 1996 and currently sells 13 models across segments. Hyundai has won over buyers with its affordable cars such as Santro and sports-utility vehicle Creta. The company has plans to launch new electric vehicles, establish charging stations and a battery pack assembly unit.

In FY24, Hyundai Motor India was India’s second-largest carmaker after Maruti Suzuki India in terms of passenger sales volumes. The company earned a revenue of 60,000 crore with a net profit of 4,653 crore in FY23, the highest amongst the non-listed car manufacturers in the country.

The auto major reported a seven per cent year-on-year increase in total sales at 63,551 units in May 2024 compared to 59,601 units in the corresponding month last year. The domestic dispatch of vehicles to dealers saw a one per cent rise to 49,151 units last month from 48,601 units in the year-ago period. Exports grew 31 per cent in May to 14,400 units compared to 11,000 units a year ago.

Passenger vehicle makers attract rich valuations in India due to surging demand in the domestic market, especially for premium models. Listed Indian auto companies include Maruti Suzuki India (market capitalisation of over 4 trillion), Tata Motors ( 3.3 trillion) and Mahindra & Mahindra or M&M ( 3.6 trillion).

 

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Published: 15 Jun 2024, 07:59 PM IST

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