Hyundai Motor India IPO Date, Review, Price, Allotment Details

Even as the budget remains a hot topic of discussion, there is another piece of news that investors are abuzz with — the Hyundai Motor India IPO. The leading automaker has already filed its draft red herring prospectus (DRHP) with the SEBI and is expected to announce its IPO dates and details soon. 

Ahead of this big issue, the auto manufacturing company recorded excellent sales in the country. In the first half of 2024 ending on June 30, Hyundai Motor sold 2,72,207 units as per data from the Federation of Automobile Dealers Associations of India (FADA). Sales in these 6 months were up by 2% compared to the same period in the previous year.

With its record sales further adding to the company’s appeal, what does the Hyundai Motor India IPO hold for investors? Let’s find out. 

What the Hyundai Motor India DRHP Tells Us

Hyundai Motor India is the domestic arm of the internationally famous South Korean automobile manufacturer. On June 15, 2024, the company filed its DRHP with the market regulator. While the document does not offer any key details of the Hyundai Motor IPO yet, here’s what we do know so far.

The issue is expected to include an offer of 142.2 million shares at a face value of Rs. 10 each. This amounts to around 17.5% of the company’s total 812 million shares. Sources also suggest that the company is expected to raise at least $3 billion or Rs. 25,000 crore via the IPO. If this comes to pass, the Hyundai Motor India IPO could outrank the LIC IPO to become the largest initial public offering in the country. 

Reason for the IPO

The Hyundai Motor India IPO is essentially an Offer for Sale (OFS) through which the company’s promoter — Hyundai Motor Company (HMC) — aims to dilute its holdings. 50% of the total shares being issued have been reserved for Qualified Institutional Buyers (QIBs), 35% for retail investors and 15% for non-institutional participants.

In addition to this reason, the Hyundai Motor IPO has also been scheduled this year in a bid to address the Korean discount — which is a phenomenon where South Korean companies often have lower valuations than their international counterparts. This is because of various reasons like the prevalence of opaque conglomerates in the country, its geopolitical risks from its proximity to North Korea and the generally low dividends that South Korean companies offer.

However, given the popularity of Hyundai Motor in India and its strong presence in the country, the IPO is expected to attain higher valuations and close the typical gap. 

What the Experts are Saying About Possible Price Bands and Valuation

Since the DRHP filed with the SEBI does not offer any clarity on the issue’s price band and valuation, the market is rife with speculation about these parameters. Investors, analysts and competitors alike are eager to decode the price band of the Hyundai Motor India IPO and how the offer may be affected by the band chosen. 

On the one hand, this IPO is viewed as integral to the Korean car maker’s push for value creation, which began in 2023. So, if the valuation is based on the company’s P/E ratio trajectory and the Hyundai Motor IPO is launched at any band ranging from a 30% discount to a 10% premium, the shares may be priced between Rs. 1,265 and Rs. 1,990 each. 

Alternatively, if the P/B ratio is used as the foundation of the issue’s valuation and pricing, the IPO may go live at a range from a discount of 20% to a premium of 20%. In this case, analysts expect a price range of Rs. 915 to Rs. 1,375 per share.

Check out what the market experts think of the potential market value of the Hyundai Motor IPO at different possible price levels.

Comparing Valuations: Hyundai Motor IPO vs Maruti Suzuki IPO

A quick look back at the history of IPOs in India shows us that Maruti Suzuki was the last big car maker to be listed on the exchanges. Interestingly, this listing occurred over two decades earlier, in 2003. Now, with the Hyundai Motor India IPO, the South Korean automaker is all set to be the first IPO in the sector in more than 20 years. Naturally, the market is rife with comparisons between the two companies. 

Expert evaluation reveals that if the Hyundai Motor IPO is valued at par with the Maruti Suzuki issue, the shares may be offered at Rs. 1,808 apiece. Analysts are also running various scenarios about the pricing at different premiums and discounts compared with the Maruti Suzuki IPO. 

Keep an Eye Out for More Updates

With the Hyundai Motor IPO set to be launched between September and November this year, you need to keep an eye out for further updates about the issue’s pricing, dates and issue size. This will help you understand whether the issue is suitable for your portfolio. You also need to perform your own due diligence and assess the fundamentals of the company to check if its pricing matches its valuation. 

The Motilal Oswal Research 360 Platform can help you with this. With a friendly user interface and regular updates, we make sure that you are never out of the loop when it comes to market news. You can visit the IPO section on the platform to track any new details released about the Hyundai Motor IPO.