Hyundai Motor India Mega New IPO, Complete Updates
India is gearing up for a historic IPO as Hyundai Motor India (HMIL), the nation’s second-largest carmaker, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on June 14. This IPO, the largest in India’s history, involves an offer for sale (OFS) of 142.2 million equity shares with a face value of Rs 10 each, representing a 17.5 percent stake dilution by the promoters.
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Key Details of the Hyundai Motor India IPO:
The offer structure includes:
– 50 percent of shares reserved for Qualified Institutional Buyers (QIBs)
– 35 percent for retail individual investors
– 15 percent for non-institutional investors
Reasons Behind Hyundai’s Decision to Go Public:
Hyundai’s move to go public is driven by its goal to leverage India’s expanding market potential, enhance its valuation, and address the “Korean Discount” issue, where South Korean firms are undervalued compared to international counterparts. By listing its Indian subsidiary, Hyundai aims to unlock higher valuations and attract a broader investor base. The DRHP indicates that the offer for sale by existing promoters will unlock value in the Indian business.
Financial Performance of Hyundai Motor India:
Hyundai has invested $5.04 billion (approximately Rs 29,740 crores) in its India operations since inception until December 2023. In FY2023, HMIL showcased a profitable business in India, with annual revenue near Rs 59,761 crore and a net worth of Rs 19,778 crore. With the optimism in the Indian equity markets, the company sees this as an opportune time for partial stake dilution by the promoters to enhance value recognition.
Hyundai Motor India’s Financials:
– Revenue from operations: Rs 52,157.9 crore for the nine months ending December 2023
– Profit for the period: Rs 4,382.87 crore
– EBITDA: Rs 6,610.7 crore, with an EBITDA margin of 12.67 percent
– Net worth: Rs 19,777.91 crore for the same period
Top Risks to Consider Before Investing in Hyundai IPO:
The DRHP highlights several risks associated with Hyundai’s business, including potential conflict of interest with group companies, manufacturing plant disruptions, government incentive changes, dependency on SUV sales, and price fluctuations of parts and materials. Hyundai Motor India Mega New IPO, Complete Updates
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Investment Potential:
With Maruti Suzuki India Limited (MSIL) being the sole pure-play in passenger vehicles, HMIL offers a promising opportunity for investors. Analysts are optimistic about Hyundai’s growth trajectory, supported by robust cash flows for future investments in product development, marketing, and sales initiatives. The company’s focus on technology and customer needs positions it well to dominate segments like CUVs and EVs, with successful launches in these categories.
Disclaimer:
The opinions expressed in this article are those of individual analysts and not Investonomic.co.in. Investors are advised to consult certified experts before making any investment decisions.
