Hyundai Motor India Limited IPO
As a subsidiary of the Hyundai Motor Group, one of the world’s largest automotive original equipment manufacturers (OEMs), we hold a strong market presence in India and internationally. Their parent company, Hyundai Motor Group, ranked third globally in terms of passenger vehicle sales in the calendar year (CY) 2023, according to a CRISIL report. They have been the second-largest OEM in the Indian passenger vehicle market since Fiscal Year 2009, in terms of domestic sales volume.
Their company specializes in the manufacturing and sale of passenger vehicles, focusing on reliability, safety, innovation, and cutting-edge technology. This is reflected in their diverse portfolio, which includes 13 models across multiple segments of passenger vehicles, such as sedans, hatchbacks, sports utility vehicles (SUVs), and battery electric vehicles (EVs). In addition to vehicle production, they manufacture parts such as transmissions and engines for their manufacturing processes and for sale.
From April 1, 2021, to June 30, 2024, they were the second-largest exporter of passenger vehicles from India, according to CRISIL. Since their inception in 1998, they have cumulatively sold over 12 million passenger vehicles in India and through export markets. Their market position is strengthened by a combination of factors such as their extensive product range, strong stakeholder relationships, a solid brand reputation, technological advancements, and their foray into emerging markets like electric vehicles (EVs).
In 2023, they were among the top three contributors to Hyundai Motor Company’s (HMC) global sales volume, with our contribution increasing from 15.48% in 2018 to 18.19% in 2023.
Business Model
Their business model is built on several key pillars that drive their success:
i. Strong Parentage of Hyundai Motor Group ii. Synergies with Hyundai Group Affiliates
iii. Innovation and Technological Leadership iv. Strong Market Presence and Sales Network
v. Commitment to Sustainable Growth
Conclusion
As a key subsidiary of the Hyundai Motor Group, their success is built on a strong foundation of innovation, customer-centric design, and operational efficiency. They benefit from the global resources and expertise of their parent company, while their local market knowledge and strategic focus on innovation ensure they continue to be a leader in India’s automotive industry.
With a growing presence in emerging markets such as electric vehicles, and a commitment to leveraging new technologies to meet evolving customer needs, they are well-positioned for sustainable growth. Their ability to integrate the best practices of the Hyundai Motor Group into their operations ensures that they remain competitive, agile, and responsive to market trends, both in India and globally.
Objects of the Hyundai Motor India Limited IPO:
Hyundai Motor India Limited IPO Details:
| Open Date: | Oct 15 2024 |
| Close Date: | Oct 17 2024 |
| Total Shares: | 142,194,700 |
| Face Value: | ₹ 10 Per Equity Share |
| Issue Size: | 27,870.16 Cr. |
| Lot Size: | 7 Shares |
| Issue Price: | ₹ 1865 - 1960 Per Equity Share |
| Listing At: | NSE,BSE |
| Listing Date: | Oct 22 2024 |
Promoters And Management:
Financials of Hyundai Motor India Limited IPO:
| Particular (In Crores) | Q1FY25 | Mar-24 | Mar-23 | Mar-22 |
| Revenue from Operations | 17344 | 69,829 | 60,308 | 47,378 |
| Cost of Material Consumed | 11764 | 51298 | 44509 | 35231 |
| Purchases | 180 | 433 | 656 | 656 |
| Change in Inventories | 534 | -138 | -135 | -62 |
| Employee Cost | 553 | 1975 | 1766 | 1648 |
| Other Expenses | 1974 | 7128 | 5963 | 4420 |
| EBITDA | 2339 | 9,133 | 7,549 | 5,485 |
| EBIDTA Margin | 13.49% | 13.08% | 12.52% | 11.58% |
| Other income | 224 | 1473 | 1129 | 588 |
| Depreciation | 529 | 2208 | 2190 | 2169 |
| Interest | 32 | 158 | 142 | 132 |
| Profit before tax | 2002 | 8,240 | 6,346 | 3,772 |
| Tax | 514 | 2180 | 1636 | 871 |
| Net profit | 1489 | 6,060 | 4,710 | 2,901 |
| NPM (%) | 8.59% | 8.68% | 7.81% | 6.12% |
| EPS | 18.33 | 74.58 | 57.97 | 35.70 |
Comparison With Peers:
| Name of the Companies | Revenue (Cr) | Profit (Cr) | EPS | P/E | CMP | Mcap (cr) |
| Hyundai Motor India Limited | 69,829 | 6,060 | 74.58 | 26 | 1960 | 1,59,258 |
| Maruti Suzuki India Limited | 1,41,858 | 13,488 | 429 | 26.8 | 12,555 | 3,94,731 |
| Tata Motors Limited | 4,37,928 | 31,807 | 94.47 | 10 | 928 | 3,41,457 |
| Mahindra & Mahindra Limited | 1,39,078 | 12,270 | 90.62 | 35.6 | 3155 | 3,92,340 |
Recommendation on Hyundai Motor India Limited IPO:
- Offer for Sale Structure (OFS): Similar to other high-profile IPOs like Nykaa, the Hyundai IPO is structured as an OFS. This means that no money raised through the IPO will be used to fund the company's growth. Instead, the funds go directly to the promoters, in this case, Hyundai's promoters in Korea. An OFS benefits existing shareholders and offers limited or no direct financial support to the company itself.2. Promoters’ Exit Strategy: A key concern is why the promoters are selling their shares if they truly believe in the long-term growth of the business. When promoters sell off their stake through an IPO, especially after securing their shares at a significantly lower price (₹10), it raises questions about their confidence in the future of the company. Selling at a time when share prices are likely to be high reflects an opportunity for the promoters to exit with substantial gains, leaving less upside for public investors. 3. Draining of Cash Reserves: Prior to the IPO, there have been reports suggesting that Hyundai has already taken substantial amounts out of the company's cash reserves. This could potentially weaken the company’s financial position, as these reserves are vital for reinvesting in business operations, innovation, and expansion. Additionally, there's been an increase in royalties paid, further suggesting that profits are being funneled out of the company to the parent entity abroad. 4. Lack of Capital Infusion into the Company: Unlike IPOs that raise capital for growth, such as new projects, expansions, or strengthening the balance sheet, Hyundai's IPO does not serve the purpose of bringing fresh funds into the business. This means that any potential for long-term growth is not directly boosted by the proceeds from this IPO. Investors need to be wary that they are buying into shares sold by existing owners, not investing in a company that will see financial benefits from the capital raised. 5. Valuation Concerns: The valuation of the IPO has been questioned by market participants. Investors should critically evaluate whether the offered price justifies the company's current financials, growth prospects, and market conditions. Overvaluation risks have been prevalent in recent IPOs, leading to poor post-listing performance. 6. Historical Precedents: Recent IPOs, such as those of Paytm and Nykaa, have left many retail investors disappointed. Paytm, in particular, saw a significant drop in stock price post-IPO, despite the initial hype. These examples show that large, hyped-up IPOs don’t always live up to expectations, especially when their structure primarily benefits the promoters rather than the company. Conclusion: Be Patient, Watch the Market
Lead Manager of Hyundai Motor India Limited IPO:
Registrar of Hyundai Motor India Limited IPO:
Company Address:
Discussion on Hyundai Motor India Limited IPO:
5 Comments
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The listing was less than flat and the closing was in line with the market trend of the day. My sympathies are with those who participated. After all the show must go on. A buzzing capital market is essential for the future economic development of the country. Good luck to all passionate investors.
Hope SEBI get some power in the pricing of IPOs. More so in the case of large ones.
Thanks to QIB subscribers, the IPO sailed⛵ through.Very much relieved😊
avoid
Highly priced. Expected to list flat. Will be available at a lower price later. Not applying