Hyundai Motor India Limited (HMIL) Rs. 27,870 Crores IPO Opens on 15 October Price Band Set at Rs 1,865 – 1,960 Per Share, The IPO will close on October 17

MUMBAI, 9 OCTOBER, 2024 (GPN): Hyundai Motor India Limited, India’s second-largest car manufacturer, has fixed the price band for its Initial Public Offering (IPO) at Rs 1,865-1,960 per share, targeting to raise a massive Rs 27,870 crore. This public issue, slated to open on October 15, is one of the largest in recent Indian history and marks Hyundai Motor India’s first listing on the Indian stock exchanges. The IPO is fully an offer-for-sale by the parent company, Hyundai Motor Company (HMC), based in South Korea.

The issue, which is only an offer for sale, through which the parent will sell 17.5 per cent or 14.2 crore of its equity in the issuer and has no fresh issue therefore the entire proceeds will to the selling shareholder and not to the company. The issue opens on October 15 and employees have a Rs 186 discount from the declared price band.

The IPO, valued at Rs 27,870 crore at the upper price band, is a significant event for the Indian automobile sector, comparable only to Maruti Suzuki’s listing in 2003. Hyundai’s parent firm, HMC, will retain an 82.5% stake in its Indian unit after the IPO.

Hyundai’s offering includes 14.2 crore equity shares with no fresh issue, meaning all proceeds will go directly to the parent company, HMC. The funds raised will primarily serve to list Hyundai Motor India on the Indian stock exchanges without any new capital infusion into the company.

Investors, both retail and institutional, will have various opportunities to participate. Retail investors can bid for at least seven shares, translating to a minimum investment of Rs 13,720. Institutional investors can also invest through an anchor book, opening on 14 October a day before the public issue opening on October 15. The IPO will close on October 17.

The issue has a strategic allocation plan, with 50% of the shares reserved for Qualified Institutional Buyers (QIBS), 35% for retail investors, and 15% for non-institutional investors. Employees will receive up to 7,78,400 shares at a discounted rate of Rs 186 per share.

“We have also been the country’s largest exporter of passenger vehicles from fiscal 2005 to the first 11 months of fiscal 2024, having exported the highest cumulative number of passenger vehicles. Since 1998 and up to March 2024, we have cumulatively sold nearly 12 million passenger vehicles in the country and through exports. In 2023, we were among the top three contributors to our parent’s global sales volumes, and our contribution to its sales volumes has increased from 15.48 per cent in 2018 to 18.19 percent in 2023,” Mr. Unsoo Kim, Managing Director of Hyundai India said to GPN.

Kim also said the company has plans to invest about Rs 32,000 crore here over the next decade and will be investing to make its Pune plant automated, aiming for a healthy mix of domestic and export sales. On commissioning the Pune facility, its capacity will be 1.07 million per annum, up from 8.24 lakh unit now, which is an addition of 30 per cent by FY28.

The P/E ratio for Hyundai India is at 27x, while that of the parent Hyundai Motor Company is at 5x, according to note by Mumbai-based brokerage Aequitas Investments. It also said Hyundai India, despite contributing only 6.5 per cent to global revenue and 8 percent to global profitability, will be valued at around 42 per cent of the parent company’s market capitalisation on the listing.

The Chennai plant, where it has two units is the largest single-location auto plant in the whole of Asia, Mr. Tarun Garg, COO & Whole Time Director, Hyundai Motor India said.

Calling India ‘one of the most exciting auto market in the world’, Hyundai said it is the ‘right time to further Indianize its operations’ and the public issue will ensure that it is even more dedicated to success in India, offering opportunity for growth to shareholders and investors.

Hyundai Motor India has been a dominant player in the Indian automobile market. It recorded a robust financial performance in FY24, with a 28.7% increase in net profit, reaching Rs 6,060 crore, and revenue growth of 15.8%, hitting Rs 69,829 crore. The company also saw a 4.3% revenue increase in the first quarter of FY25.

The IPO will be managed by top-tier financial institutions, including Kotak Mahindra Capital, Citigroup Global Markets, HSBC, JP Morgan India, and Morgan Stanley India, solidifying its significance in the Indian economic parlance.