Hyundai Motor India IPO Set to Open Tomorrow: Key Insights for Investors Before Subscription

Hyundai Motor India is gearing up for one of the most awaited IPO launches, scheduled to open for subscription starting tomorrow. Investors have been closely watching the developments, as this will be the largest IPO in India's capital markets to date, surpassing previous records in terms of scale and anticipated interest. The offer is entirely composed of an offer-for-sale from Hyundai Motor Company, Hyundai Motor India's South Korean parent company, seeking to offload a significant portion of its stake in the Indian subsidiary. This IPO offers an opportunity for retail and institutional investors to become part of a global automobile giant with a well-established presence in India.

The price band for this IPO has been set between ₹1,865 and ₹1,960 per share. This pricing structure suggests a premium valuation for a company that has maintained a dominant position in India's automobile market. Hyundai Motor India plans to raise an estimated ₹27,870.2 crore from the IPO, making it one of the most significant events in the market this year. Despite market volatility, the interest in this offering remains high due to the solid financials of Hyundai Motor India and its future growth potential.

The IPO will be open for subscription from October 15 to October 17, 2024. On October 14, the anchor book details will be made available, giving large institutional investors a head start in the bidding process. Hyundai Motor India has reserved a portion of the shares for employees, offering them a discount of ₹186 per share, which is below the final price for general investors. Retail investors can bid for a minimum of seven shares, with the total investment amount ranging from ₹13,720 for the smallest lot size to ₹1,92,080 for the largest lot size, considering the ₹2 lakh investment cap for retail participants.

This IPO is expected to attract attention not just because of its size but also because Hyundai Motor India is a leading player in the Indian automobile market. As the second-largest manufacturer of passenger vehicles in India, it holds a strong position, competing closely with market leaders like Maruti Suzuki, Tata Motors, and Mahindra & Mahindra. Hyundai’s market share, which currently stands at about 15%, has seen slight declines in recent years due to increasing competition. However, the company continues to innovate and expand its offerings across segments, from sedans to electric vehicles (EVs), to maintain its market edge.

In addition to its vehicle manufacturing capabilities, Hyundai Motor India is also engaged in producing critical components such as transmissions and engine parts, further contributing to its integrated supply chain. The company’s domestic operations are complemented by a vast network of 1,377 sales outlets and 1,561 service centres across India, ensuring a robust distribution and service model that supports its long-term growth.

ALSO READ| Hyundai Motor India IPO: A Golden Opportunity for Investors Ahead of Diwali

From a financial perspective, Hyundai Motor India has delivered strong results in the past year. The company recorded an impressive revenue growth of 15.8%, bringing total revenue to ₹69,829 crore for FY24. Additionally, EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 21%, reaching ₹9,132.6 crore. This growth trajectory signals a healthy financial performance, which is crucial for potential investors looking at the company’s profitability and long-term sustainability.

Investors should also be aware of certain risks associated with this IPO. Hyundai Motor India operates in a highly competitive environment, facing pressure from both established players and new entrants in the Indian market. Companies such as Kia Motors, Honda Cars India, and Skoda Auto India have all been intensifying their efforts to capture market share, which could pose challenges for Hyundai’s future growth. Furthermore, the company’s reliance on its SUV segment, which accounts for 67% of its sales, could expose it to risks if market preferences shift away from this category.

Another potential risk factor is the ongoing competition within the Hyundai Motor Group itself. Kia Corporation, a fellow subsidiary of Hyundai Motor Company, is also expanding aggressively in India, which could lead to internal conflicts of interest, especially in shared segments like SUVs and electric vehicles. Investors should consider these factors carefully before deciding to subscribe to the IPO.

For investors looking to secure shares in this highly anticipated IPO, the allotment of shares will be finalized by October 18. Successful bidders can expect their shares to be credited to their demat accounts by October 21. Trading in Hyundai Motor India’s shares will officially begin on October 22, when the company makes its debut on the NSE and BSE.

ALSO READ| Bajaj Housing Finance Shares Fall 6% as Lock-In Period Ends for 12.6 Crore Shares

In conclusion, while Hyundai Motor India's IPO offers an attractive opportunity for investors to own a stake in one of the country’s most successful automobile manufacturers, it is crucial to weigh the risks and consider the company's competitive position, financial performance, and market dynamics. As always, it is recommended to consult financial advisors before making any investment decisions.