INVC NEWS
Mumbai : Hyundai Motor India Limited (HMIL), the Indian arm of South Korea’s automotive giant Hyundai, is poised to launch what will be the largest Initial Public Offering (IPO) in Indian history. With a size of ₹27,870 crore, this IPO is set to surpass even the colossal LIC IPO that previously held the record at ₹21,000 crore. The IPO will open for subscription on October 15, 2024, and investors are eagerly anticipating this momentous event. Below, we delve into the crucial details that prospective investors need to know, including the price band, IPO structure, and other important specifics.
Hyundai IPO Price Band and Dates
Hyundai has set a price band of ₹1,865 to ₹1,960 per share for its IPO. The subscription process will commence on October 15, 2024, and will be available for retail investors until October 17, 2024. Anchor investors, however, will have the opportunity to subscribe a day earlier, on October 14, 2024.
Key Dates:
- Anchor Investor Subscription Date: October 14, 2024
- Retail Subscription Period: October 15–17, 2024
- Allotment Date: October 18, 2024
- Listing Date: October 22, 2024
The IPO will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The registrar for the IPO is KFin Technologies, which will oversee the allotment and refund process.
Why This IPO is Historic
Hyundai’s ₹27,870 crore IPO is a landmark event in India’s financial history, given its size and the strategic significance of the company in the country’s auto sector. This IPO will break the previous record held by LIC, making it the largest IPO ever launched in India.
The IPO will be entirely an Offer for Sale (OFS), with 14.21 crore equity shares being offered by Hyundai Motor Company (HMC), the parent company based in South Korea. Notably, this IPO will not issue any fresh equity shares. Therefore, the entire proceeds from the sale of shares will go directly to Hyundai Motor Company, rather than the Indian unit.
This IPO marks the first public offering by an automaker in India in over two decades, following Maruti Suzuki’s IPO back in 2003. It presents a significant milestone for Hyundai, a company that entered the Indian market in 1996 and has grown to become one of the most prominent players in the country’s automotive industry.
Hyundai’s Market Position in India
Hyundai has been a dominant force in the Indian automobile market for several decades. Since launching operations in 1996, the company has introduced a range of successful models across various segments. Hyundai currently offers 13 different models in India, catering to diverse customer preferences from compact hatchbacks to premium SUVs.
In terms of market share, Hyundai is the second-largest automaker in India, trailing behind Maruti Suzuki. As of 2024, Hyundai holds approximately 14.6% of the Indian passenger vehicle market. Despite the stiff competition, the company has maintained its stronghold, primarily due to its innovative products, customer-centric strategies, and expansive distribution network.
Sales Performance in 2024
In September 2024, Hyundai sold 64,201 units in the domestic market, a 10% decline compared to the previous year. Cumulatively, the company has sold around 5.77 lakh vehicles in 2024 so far, remaining largely flat compared to its 2023 performance.
This robust presence in India’s auto market adds substantial weight to Hyundai’s upcoming IPO, making it a highly attractive investment option for both institutional and retail investors.
IPO Breakdown: Offer for Sale (OFS)
As noted earlier, the IPO will consist entirely of an Offer for Sale (OFS) by Hyundai Motor Company. Under this structure, no new shares will be issued, and all the proceeds will benefit the parent company. This is a notable distinction from other IPOs that often include fresh equity issuance to raise capital for business expansion or debt reduction.
The OFS mechanism means that investors will be buying existing shares from the promoter, Hyundai Motor Company, which has opted to divest part of its stake in its Indian subsidiary. This move could potentially indicate the parent company’s desire to unlock value in one of its most important markets while maintaining a strong presence in India.
Investment Opportunities and Risks
Reasons to Consider Hyundai’s IPO
- Strong Market Position: Hyundai’s extensive product lineup and its second-place ranking in market share make it a formidable player in the Indian automotive sector. This provides investors with exposure to one of the country’s most prominent companies.
- Consistent Performance: Despite a slight dip in recent sales, Hyundai’s overall performance has remained stable over the years, ensuring that investors are buying into a company with a solid track record.
- Global Reputation: As part of the Hyundai Motor Group, the Indian unit benefits from the technological advancements and global market strategies of one of the largest automobile manufacturers in the world.
- Long-Term Growth Potential: With the Indian automotive market poised for significant growth in the coming years, Hyundai is well-positioned to capitalize on this momentum. The company’s continued focus on electric vehicles (EVs) and sustainable technology also promises growth in future markets.
Potential Risks
- No Fresh Issue of Shares: Since the IPO is an Offer for Sale, no fresh capital will be injected into the Indian operations. The proceeds will go to the parent company, potentially limiting opportunities for business expansion in India.
- Intense Competition: Hyundai faces tough competition from Maruti Suzuki, Tata Motors, and other domestic and international brands. Any market share erosion could impact future growth.
- Industry-Specific Risks: The automotive sector is subject to various risks, including fluctuations in commodity prices, regulatory changes, and evolving consumer preferences. Investors should be mindful of these factors when evaluating Hyundai’s long-term growth prospects.
How to Apply for the Hyundai IPO
Retail investors can apply for Hyundai’s IPO through multiple channels, including:
- Online applications via trading platforms offered by brokers.
- UPI (Unified Payment Interface) systems for simplified payment processing.
- Physical forms available at designated banks and brokers for those preferring offline modes.
Minimum Investment Requirement
Investors can bid for the IPO in lots, with the minimum bid being set at one lot of shares. The exact number of shares per lot will depend on the final price determined at the time of listing. Given the price band of ₹1,865 to ₹1,960 per share, investors should expect to allocate a minimum of ₹14,920 to ₹15,680 for the smallest investment.
Final Thoughts
Hyundai’s historic IPO is shaping up to be a monumental event for India’s financial markets. The sheer size of the offering, combined with the company’s solid market presence, makes this IPO an attractive proposition for investors. While the Offer for Sale (OFS) structure might limit immediate benefits for Hyundai’s Indian unit, the opportunity to invest in a global automotive leader with a strong foothold in one of the world’s fastest-growing markets cannot be understated.
This IPO is not just an investment in Hyundai’s past performance, but in its potential to thrive in a rapidly evolving automotive landscape. Prospective investors should weigh the growth opportunities against the risks and consider Hyundai’s long-term prospects when making their decisions.
