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Hyundai Motor India IPO review
ICICI Direct Research: Subscribe
ICICI Direct Research has assigned a ‘Subscribe’ rating on Hyundai Motor India given the company’s steady growth prospects amid industry tailwinds, robust financials and healthy SUV product slate.
However, the brokerage said that it expects limited listing gains for this IPO but expect the company to deliver healthy double-digit portfolio returns over a medium to long term period.
“At the upper end of the price band, HMIL will command a valuation of 26 times P/E, 16.5 times EV/EBITDA and 2.3 times P/S on FY24 basis, which is at a tad discount to industry leader i.e. Maruti Suzuki India,” it said.
SBI Securities: Subscribe for long term
The brokerage in a note said that Hyundai Motor India has the second largest market share in the Indian PV industry after Maruti Suzuki and is also the second largest exporter of cars from India. SUVs (higher margin vehicles) contribute a large share of the company’s volumes, which reflects in the relatively higher material and operating margins as well as return ratios.
Strong brand, blockbuster models such as Creta, Alcazar, Venue and Verna, advanced technology and high export potential are key differentiators, highlighted SBI Securities.
“At the upper price band of ₹1,960, Hyundai Motor India is valued at 26.3 times FY24 EPS,” the brokerage said while assigning a subscribe rating to the issue for a long term.
Arihant Capital: Subscribe for long term
The brokerage has assigned a ‘Subscribe for long term’ rating to the issue. Arihant Capital said that Hyundai has plans to gradually become a major player in the EV segment, and that it has also recorded one of the highest RoNW among its peers. It believes the company can take advantage of the growing PV market in India with its diverse offerings.
Hyundai Motor India IPO details
The Indian unit of South Korean carmaker Hyundai Motor will be selling its shares in the range of ₹1,865-1,960 crore to raise a total of ₹27,856 crore through the IPO.
Ahead of the automobile firm’s mega IPO, shares of Hyundai Motor India have seen a significant fall in the grey market. The grey market premium (GMP) of the company fell by over 80% in the last 10 days.
Data from platforms tracking GMP activities show that the premium for the company’s IPO shares has fallen to ₹65, as of October 14, marking a steep drop from ₹365 on October 4 — a nearly 82% decline.
Mayuresh Joshi, Head of Equity Research at William O’ Neil raised concerns about liquidity, saying, “The Hyundai IPO will suck liquidity out of the market as it is very large. It will be followed by the Swiggy IPO, so you’re looking at ₹31,000-32,000 crore being drained from the market.”
However, Joshi said that Hyundai’s IPO is “very attractive” in terms of valuation, product offerings, and pricing, recommending a ‘Subscribe’ rating to the IPO.
The IPO will be a complete Offer For Sale (OFS), where the company’s parent will be selling 14.2 crore shares or 17.5% of the total equity.
Investors can bid for one lot of seven shares, followed by multiples of seven thereafter.
The three-day public offer will open for subscription on October 15 and close on October 17.
BlackRock Inc. and Singaporean sovereign wealth fund GIC Pte are among those that have made bids to buy stock in Hyundai Motor India’s IPO, according to a Bloomberg report.
The record-breaking IPO in Mumbai is also attracting other local and international institutional investors, the report added.
The so-called anchor book for the IPO, which is set to be the biggest ever in India, has been fully allocated, with half going to domestic institutions and the other half to international investors. The anchor investor portion consists of as many as 4.24 crore shares.
As much as 50% of the issue has been set aside for Institutional Investors (QIB), while 15% of the issue has been reserved for non-institutional investors (NII). 35% of the IPO has been reserved for retail investors.
Hyundai Motor India shares will carry a face value of ₹10 each.
The company will offer a discount of ₹186 per share to eligible employees who will be bidding in the IPO.
Company overview
Hyundai Motor India is an integral part of the prestigious Korea-based Hyundai Motor Group and has firmly established itself as one of the top auto OEMs in India. HMIL currently has a portfolio of 13 models across multiple segments of body type such as sedans, hatchbacks, SUVs and battery electric vehicles. It is predominantly an SUV focused player with major presence across urban India.
Hyundai Motor India is the second-largest OEM and the second-largest exporter of passenger vehicles and has a domestic market share of 14.6%.
For the month of September, Hyundai sold 64,201 units, a decline of 10% on a year-on-year basis. For 2024 till now, the company has sold 5.77 lakh units, which is flat compared to last year.
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