The much-anticipated Hyundai Motor India Limited (HMIL) IPO is creating a buzz in the stock market. Investors are eager to learn whether this IPO is worth applying for or if it should be avoided.
With the Hyundai brand being a household name in India and globally, this IPO is significant, not just due to the company’s reputation but also the massive scale of the offering.
In this review, we will delve deep into the Hyundai IPO details, subscription process, pricing, and allotment, providing you with a complete analysis to help you make an informed decision.
Introduction
As India’s automotive sector gears up for another mega IPO, Hyundai Motor India Limited (HMIL) is ready to hit the market with a massive offering. /
With the IPO price band set between ₹1865 to ₹1960, the upcoming Hyundai IPO is already making headlines. But the question remains: should you apply for the Hyundai IPO, or is it better to avoid it?
This article will provide a thorough review of the IPO details, financials, and overall market sentiment to help you make a calculated decision.
Hyundai IPO Details
The Hyundai Motor IPO is a book-built issue scheduled to open on October 15, 2024, and close on October 17, 2024. With an issue size of ₹27,870.16 crores, this IPO is entirely an offer for sale (OFS), meaning no fresh capital will be raised for the company. Instead, the proceeds will go to the promoter, Hyundai Motor Company, as they sell off part of their existing stake.
Here are the key details of the IPO:
| Particulars | Details |
| IPO Open Date | October 15, 2024 |
| IPO Close Date | October 17, 2024 |
| Price Band | ₹1865 – ₹1960 per share |
| Lot Size | 7 shares |
| IPO Size | ₹27,870.16 crore |
| Listing | BSE, NSE |
| Allotment Date | October 18, 2024 |
| Listing Date | October 22, 2024 |
| Face Value | ₹10 per share |
| Offer for Sale (OFS) | 14.22 crore shares |
| Employee Discount | ₹186 per share |
Hyundai IPO Price and Allotment
The Hyundai IPO price is set at ₹1865 to ₹1960 per share, which is within the premium range for Indian IPOs. Retail investors can apply for a minimum of 7 shares per lot, amounting to a minimum investment of ₹13,720. The IPO also includes an employee reservation of 778,400 shares at a discounted rate of ₹186 per share, encouraging employee participation.
Once the IPO subscription closes, the Hyundai IPO allotment will be finalized on October 18, 2024, with shares being credited to successful applicants’ Demat accounts on October 21, 2024. The Hyundai IPO listing is expected on October 22, 2024, on both the BSE and NSE.
Also Read: : Upcoming IPOs With Shareholder Quota in 2024
Hyundai IPO Subscription Status
With the sheer size of the issue and the brand value of Hyundai, the Hyundai IPO subscription status is expected to be strong. Hyundai has raised ₹8,315.28 crores from anchor investors, who subscribed to 42.42 million shares on October 14, 2024. The anchor portion alone indicates strong institutional interest, which is a positive sign for retail investors.
Based on the category-wise distribution, the IPO has the following reservation:
| Category | Shares Offered |
| Qualified Institutional Buyers (QIBs) | 50% of the Net Issue |
| Retail Investors | 35% of the Net Issue |
| Non-Institutional Investors (NIIs) | 15% of the Net Issue |
Hyundai Pre-IPO Stock Performance
For investors interested in the Hyundai pre-IPO stock, it’s essential to note that the company’s financials have been solid, which should translate into positive market sentiment during the IPO. As of March 31, 2024, Hyundai India’s profit after tax (PAT) surged by 29% from the previous year, reflecting robust growth. The company’s revenue also saw a 16% increase, positioning it as one of the strongest players in the Indian automotive sector.
Financial Performance Overview
| Metrics | June 30, 2024 | March 31, 2024 | March 31, 2023 |
| Assets (₹ Cr) | 25,370.24 | 26,349.25 | 34,573.34 |
| Revenue (₹ Cr) | 17,567.98 | 71,302.33 | 61,436.64 |
| Profit After Tax (₹ Cr) | 1,489.65 | 6,060.04 | 4,709.25 |
| Net Worth (₹ Cr) | 12,148.71 | 10,665.66 | 20,054.82 |
| Reserves & Surplus (₹ Cr) | 11,336.17 | 9,853.12 | 19,242.28 |
| Total Borrowing (₹ Cr) | 758.14 | 767.92 | 1,158.60 |
The company’s robust financials indicate that Hyundai is in a strong position to weather market fluctuations and deliver sustained growth.
Hyundai IPO Valuation and Peer Comparison
In terms of valuation, the Hyundai IPO price translates into a P/E ratio of 26.73, which is fairly reasonable compared to its peers in the automotive sector. The Return on Capital Employed (ROCE) is 13.69%, and the Return on Net Worth (RoNW) is 12.26%. These metrics are on par with other major auto companies listed in India.
However, one factor to consider is that the entire issue is an offer for sale (OFS), meaning no new capital will be raised for business expansion. The existing shareholders are merely offloading their stakes, which may be a red flag for some investors. Still, with Hyundai’s global brand reputation and strong financials, many investors may feel comfortable applying for the IPO.
Pros and Cons of Hyundai IPO
| Pros | Cons |
| Strong Market Position: Leading Indian carmaker with diverse vehicles, including EVs. | Offer for Sale (OFS): No funds raised for the company’s growth. |
| Solid Financials: 29% growth in profit last year. | High Valuation: Price range may be steep for some investors. |
| Global Brand: Established brand with strong export potential. | Competition: Faces tough competition from Tata Motors and Maruti Suzuki. |
| Diverse Product Portfolio: Meets rising demand for EVs and sustainable mobility. | Cyclical Industry: Auto sector depends on economic conditions. |
| Employee Discount: Special ₹186/share discount for employees. | No Fresh Issue: Investors may want new equity for growth. |
| Anchor Investors: Strong institutional backing secured. | Limited Retail Quota: High minimum investment limits participation. |
Pros:
- Strong Brand: Hyundai is a well-known and trusted brand in India and across the globe.
- Robust Financials: Hyundai has shown strong revenue growth and profitability, with a solid balance sheet.
- Anchor Investor Confidence: The significant anchor investor subscription shows strong institutional backing.
Cons:
- Offer for Sale (OFS): The IPO proceeds will not go to the company, and the promoters are offloading their stakes.
- High Valuation: The P/E ratio of 26.73 could be seen as overvalued compared to some competitors.
Should You Apply for Hyundai IPO?
The decision to apply for the Hyundai IPO depends on your investment strategy. If you are a retail investor seeking long-term value, Hyundai’s strong financials and brand reputation are compelling reasons to apply.
The Hyundai IPO listing is expected to be smooth, with potential for gains on listing day. However, if you are looking for a growth story backed by fresh capital, the offer for sale (OFS) structure might not be ideal.
Investors should also monitor the Hyundai IPO allotment status and subscription figures before making a final decision. Given the high demand from institutional and retail investors alike, the allotment may be highly competitive.
Conclusion
In conclusion, the Hyundai IPO offers an excellent opportunity for investors seeking exposure to a well-established brand in India’s automotive sector.
With a price band of ₹1865-₹1960 and a robust financial track record, the company is well-positioned for growth. However, with the entire issue being an offer for sale, investors should weigh the pros and cons carefully before deciding whether to apply.
Source: https://www.sebi.gov.in/filings/public-issues/jun-2024/hyundai-motor-india-limited-drhp_84186.html
