We all know that Hyundai is a dominating automobile company in the Indian roads. But have we ever imagined a Korean-based company would make a shift from dominating showrooms to the Indian stock market? Hyundai having more than decades of business with India now wants to grab the growing momentum of the country potentially.
With its dominant presence, it also has the potential to bear the record-breaking IPO in the history of India. So what are we waiting for? Let’s delve into the concept of the most expected IPO of Hyundai and have a look at their expectations.
About Hyundai Motors India
Hyundai Motors, a South Korean-based company, established its subsidiary firm Hyundai Motors India Ltd in 1996. The company has two manufacturing plants in Chennai, India, it can produce more than 7,00,000 units per annum. As a company, Hyundai gained a 15% market share in the Indian passenger vehicle segment and became the second largest manufacturer trailing the market leader Maruti Suzuki.
Some of the key models which drove Hyundai’s sales in India include the Creta SUV, Aura Sedan and Venue compact SUV. Hyundai Motors India exports its vehicles to various countries like Saudi Arabia, Mexico, South Africa, Chile and Nepal.
Why Do Hyundai Motors Want To Launch An IPO In India?
Hyundai Motors being recognised as a dominant player in the global automotive industry is anticipating to launch its IPO (Initial public offering) between September to November around the Diwali season. Through this IPO Hyundai will be able to capitalize on the growing market potential of India, address the Korea discount and enhance its valuations.
The parent company faced a persistent issue with South Korea because of geopolitical risks and the dominance of opaque conglomerates. The company aims to unlock higher valuations with its Indian subsidiary and aims to bridge its valuation gap to become a leading global automotive player.
The IPO is said to be an Offer for sale of 14.22 crores of shares which are being diluted by the promoter Hyundai Motor Company (HMC). Out of which 50% of the company’s shares are reserved for Qualified institutional buyers, 35% for retail investors and 15% for non-institutional investors. With this IPO the company aims to raise Rs 20,000-25,000 crores.
Hyundai has been placed in premium valuation compared to its peers based on its strong performance in India. Hyundai with this IPO funding plans to expand its manufacturing capacity to meet the rising demand for vehicles in India. With this money, they will be able to set up their third manufacturing unit in Pune and boost their local production capacity by 2025.
They can also use this money to launch EVs, set up battery facilities, establish charging infrastructure in India and capitalize on the growing demand in the market. Hyundai India can also reduce their reliance on its parent company for funding and can give financial independence to their growth plans. By getting listed in India, Hyundai will attract more investors and can bolster its local brand image.
Hyundai Motor India’s Financial Performance
During the financial year 2023, the company was able to achieve a revenue of Rs 60,307.58 crore compared to that of the previous year of Rs 47,378.43 crore. They were marked by an increase of 27.29% in revenue. Hyundai India was also able to generate a net profit of Rs 4,709.25 crores in FY 23 and posted an increase of 62.3% compared to FY 22’s net profit of Rs 2,901.59 crores.
In 2023, the company was able to export its 1,63,000 units of vehicles to other countries. They also marked this particular year as their record sales year with a total sale of 602,000 units domestically.
What Can An Investor Expect?
Being an investor we must be aware of both the potential benefits and risks which are involved in this IPO before applying. Looking at the benefits side we all know that Hyundai has a great history in India and it is said to continue its momentum in future as well. The company’s consistent revenue and profit growth enhances reliability and trust. Hyundai’s strong SUV lineup coupled with its EV launch and expansion plan lays a strong foundation for continued growth.
Now let’s have a look at the risks part, whenever a company comes for an IPO its market timing is very important. Any success of an IPO will largely depend on favorable market conditions and broader economic factors. So as an investor, everyone should ensure whether Hyundai is going to achieve that or not. Even an investor has to look at the market volatility as well because during this time stock prices get volatile a lot.
How Does The Launch Of An IPO Affect The Competitors In This Segment?
Before having a look at how the launch of Hyundai’s IPO affects its competitors let’s first get to know about their competitors.
Maruti Suzuki
This company is a market leader in the passenger vehicle segment followed by Hyundai Ltd. Maruti is known for its strong brand reputation in affordability and reliability. They have an extensive dealership network.
Tata Motors
They have a diversified product portfolio comprising small cars to heavy commercial vehicles. As a company, they have a strong presence in the electric vehicle segment and their brand is associated with the highest NCAP ratings for safety.
Mahindra & Mahindra
This company has a strong presence in rural markets supplying diversified products like tractors, farm equipment, IT services along SUVs. They have expertise in off-road capable vehicles.
With the launch of the IPO, Hyundai will be able to infuse massive capital into their firm. With this cash, the company can increase their R&D investments, develop new product lines and make innovations in their technologies. This will force the competitors to ramp up their own investments and product offerings to maintain their competitive edge.
This will lead us to a wider range of choices and potentially with competitive pricing as a result it affects the profit margins of the competitors. This IPO may also re-rate the share price of Hyundai’s competitors, as the investors may see this as an attractive investment opportunity. Because of this, there may be more volatility in the share prices of their rivals.
Conclusion
Even though we haven’t received the complete information about the IPO, the anticipation has already created an electrifying start. Undoubtedly this IPO will reshape the competitive landscape in India and challenge the industry leaders to adapt their strategies. This IPO by Hyundai also signals its long-term commitment to the Indian market and its global automotive landscape.
As the IPO process unfolds investors and industry observers will be looking for key opportunities to gain from the momentum. What are you expecting from the Hyundai IPO? Do let us know in the comments below.
Next post :- Transformer Sector to Reach $57.8 Billion by 2030; Stocks to Watch