Should you invest in India’s biggest IPO: Will it be a festive treat or a letdown?
In this analysis, we take a closer look at Hyundai Motor India Ltd and present you with the exclusive IPO details.
About the issue
Hyundai Motor India Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. Below are the IPO details.
| IPO Details |
| IPO Opening Date |
October 15, 2024 |
| IPO Closing Date |
October 17, 2024 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Rs 10 per equity share |
| IPO Price |
Rs 1,865 to Rs 1,960 per equity share |
| Min Order Quantity |
7 shares |
| Listing At |
BSE, NSE |
| Total Issue |
142,194,700 shares of FV Rs 10* |
| (Aggregating up to Rs 27,870.16 Cr)* |
| Offer for Sale |
142,194,700 shares of FV Rs 10* |
| (Aggregating up to Rs 27,870.16 Cr)* |
| QIB Shares Offered |
50% of the Offer |
| Retail Shares Offered |
35% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
Considering that the issue is exclusively an offer for sale, it is crucial to note that the company will not profit from the offer proceeds. Instead, all offer proceeds will flow to the selling shareholders, distributed following the number of offered shares they sell as part of the offer.
Promoter holding
Hyundai Motor Company is the promoter of the company. The current pre-issue shareholding stands at 100 per cent, and upon completion of this offer, it will be reduced to approximately 82.50 per cent.
Company profile
Hyundai Motor India Ltd, a part of Hyundai Motor Group, was the third-largest original equipment manufacturer (OEM) globally by passenger vehicle sales in CY2023, according to the CRISIL Report.
The company manufactures and markets reliable, feature-packed, and innovative four-wheeler passenger vehicles, integrating cutting-edge technology. Its diverse portfolio includes 13 models across major body types, such as sedans (Aura, Verna), hatchbacks (Grand i10 NIOS, i20, i20 N Line), and SUVs (Exter, Venue, Venue N Line, Creta, Creta N Line, Alcazar, Tucson, and IONIQ 5), with N Line variants offering enhanced sporty performance. In addition to vehicles, the company manufactures components like transmissions and engines for both internal use and sales.
Since 1998 through June 30, 2024, it has sold over 12 million passenger vehicles in India and abroad, exporting to more than 150 countries across Latin America, Africa, the Middle East, Asia, and other regions.
It has been the second-largest auto OEM in the Indian passenger vehicle market since FY2009 (based on domestic sales volumes). In CY23, it ranked among the top three contributors to Hyundai Motor Company’s global sales, with its contribution rising from 15.48 per cent in CY18 to 18.19 per cent in CY23.
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Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
Q1FY25 |
| Revenue |
47,966 |
61,437 |
71,302 |
17,568 |
| Profit before tax |
3,772 |
6,346 |
8,240 |
2,003 |
| Net profit |
2,902 |
4,709 |
6,060 |
1,490 |
The company has consistently delivered strong growth in both revenue and profits over the past few years. Between FY22 and FY24, the company recorded a Compound Annual Growth Rate (CAGR) of 22 per cent in revenue and 45 per cent in net profit.
The June quarter figures, when annualized, reflect a marginal decline, which can be attributed to the impact of intense heatwaves across the country. However, it's important to note that the overall performance for FY25 is expected to witness substantial growth compared to FY24, driven by robust demand during the festive season in Q3FY25.
Valuation & Outlook
| Company Name |
P/E |
P/B |
RoE (%)* |
| Hyundai Motor India Ltd |
27 |
13 |
57 |
| Listed Peers |
| Maruti Suzuki India Ltd |
27 |
4 |
17 |
| Tata Motors Ltd |
10 |
4 |
49 |
| Mahindra & Mahindra Ltd |
36 |
6 |
20 |
*Based on FY24 data
The issue is priced with a P/BV ratio of 13.11 times, calculated using its Net Asset Value (NAV) of Rs 149.52 as of June 30, 2024. When we calculate the PE ratio for the company by considering the annualized FY25 earnings relative to the fully diluted paid-up equity capital, the resulting PE ratio stands at 27.
While the valuation may not be impressive to investors, the company has still significantly outperformed its listed peers in terms of returns, delivering a 57 per cent return on equity (RoE) and a 63 per cent return on capital employed (RoCE) for FY24.
The company boasts a substantial domestic and global market share, an innovative and diverse product portfolio, a comprehensive pan-India network, and a proven financial track record, positioning it for a promising future.
Conclusion
Considering the current market environment, high volatility has been observed, with foreign institutional investors (FIIs) selling nearly Rs 50,000 crore in October so far. Although Hero Motors has not specified reasons for withdrawing its Rs 900 crore IPO, the decision may be influenced by market conditions and weak investor sentiment.
Moreover, the grey market premium (GMP) for shares of Hyundai Motor India Ltd has plummeted by 75 per cent in the past two weeks. With a large number of shares available, retail investors might seek profits on listing day, leading to potential corrections. While the company has an optimistic outlook, only risk-taking investors with a long-term perspective should consider subscribing with a moderate investment approach.