Hyundai Motor India IPO Opens October 15 at ₹27,800 Crore. Why it Matters and What it Means for the Indian Stock Market

The festive season is about to become more exciting for investors as one of the most awaited Initial Public Offerings IPO of 2024, Hyundai Motor India, is gearing up to hit the market. This marks the first time since 2003 that a carmaker in India is going public, and it’s Hyundai’s first listing outside South Korea, making this IPO particularly significant.

Key Details of the Hyundai Motor India IPO

Hyundai Motor India, which holds the position of being the country’s second-largest carmaker, has raised the size of its IPO to ₹27,800 crore, up from the initially planned ₹25,000 crore. Encouraged by the recent success of other IPOs in the market, Hyundai’s decision to increase the issue size signals strong confidence in investor demand.

The IPO will open for subscription on October 15 (Tuesday) and close on October 17 (Thursday). For anchor investors, the date to make allocations is October 14 (Monday). The final share allotment will be done on October 18 (Friday), and Hyundai Motor India is expected to debut on the stock exchanges on October 22 (Tuesday).

Price and Investment Details

Though the price band is yet to be officially confirmed, reports suggest that it could range between ₹1,865 and ₹1,960 per share. The minimum lot size for retail investors is set at seven shares, meaning a minimum investment of around ₹13,720. This valuation places the company at about $19 billion, which is higher than its earlier estimate of $18 billion.

The entire public issue consists of an offer-for-sale (OFS) of up to 142.2 million shares, representing a 17.5% stake in the company by its parent, Hyundai Motor Co. At the upper price band, Hyundai Motors India is set to become one of India’s largest public listings, with the parent company valued at $46.34 billion.

Investor Categories and Reserved Shares

The allocation for this IPO is divided among different types of investors:

50% of the offer is reserved for Qualified Institutional Buyers (QIBs),
35% for retail investors, and
15% for Non-Institutional Investors (NIIs).

Additionally, 7,78,400 equity shares, valued between ₹131-138 crore, have been reserved for employees at a discount of ₹186 per share, further encouraging participation.

Lead Managers for the IPO

A group of top financial firms is leading the charge in handling Hyundai’s IPO. These include Citigroup Global Markets India, HSBC Securities, Kotak Mahindra Capital, JP Morgan India, and Morgan Stanley India.

The main goal behind Hyundai Motor India’s much-anticipated IPO is to strengthen the company’s position in India’s booming automotive market. The listing is expected to increase Hyundai Motor India’s visibility and boost its brand image domestically.

According to the company’s Draft Red Herring Prospectus (DRHP), the IPO will allow Hyundai to complete the Offer for Sale and leverage the advantages of listing on India’s stock exchanges. This is set to be the largest public offering in the country, overtaking the ₹21,008 crore IPO of Life Insurance Corporation of India (LIC) from May 2022.

The Big Bet

Hyundai’s IPO, with a size of ₹27,800 crore, will become India’s largest public issue, breaking the record set by LIC. The stakes are high, especially since India now accounts for 13% of Hyundai Motor’s global sales and 6% of its overall revenue and profit.

Hyundai currently holds a 14.5% market share in India’s passenger car segment, trailing behind Maruti Suzuki (41.7%) and slightly ahead of Tata Motors (13.8%), according to data from the Society of Indian Automobile Manufacturers (SIAM). To put this into perspective, India’s largest carmaker, Maruti Suzuki, is valued at $47.53 billion, while Mahindra & Mahindra and Tata Motors are valued at $43.46 billion and $27.60 billion, respectively.

In the last fiscal year, Hyundai sold over 614,000 vehicles domestically and exported 163,000 units. The company’s Chennai plant, which is key to its export strategy, is operating at 94% capacity. Hyundai plans to increase production to one million units by 2026, further solidifying its presence in India. With 1,377 dealerships and 13 models, Hyundai is already a dominant player in the Indian automotive space, known for its popular SUVs and hatchbacks.

Why This Matters

Hyundai’s IPO is expected to invigorate India’s stock market by attracting global investors eager to tap into the country’s rapidly expanding automotive sector. As India’s car market continues to grow, Hyundai’s IPO could showcase investment opportunities for both local and international players in the automotive and infrastructure spaces. A successful listing might even inspire other carmakers to consider going public, reshaping the market dynamics within the industry.

India’s primary market has already been breaking records in 2024. For example, last month’s ₹6,560 crore public issue of Bajaj Housing Finance was oversubscribed 64 times, with total bids reaching nearly ₹3.23 lakh crore—the highest demand in Indian market history. Furthermore, other IPOs like Diffusion Engineers, KRN Heat Exchange, Manba Finance, Northern Arc, and Arkade Developers were all oversubscribed more than 100 times.

Economic Growth Boost

As a key player in India’s automotive industry, Hyundai’s expanded production will likely boost local manufacturing and contribute to the country’s economic growth. Increased manufacturing is crucial for creating jobs and growing exports, aligning with India’s broader ambitions of becoming an automotive powerhouse. Hyundai’s IPO and expansion plans could set the stage for future foreign investments and IPOs, potentially influencing economic policies and market strategies.

So far in 2024, 62 companies have raised ₹64,510 crore, significantly higher than the ₹49,436 crore raised by 57 companies in 2023. Hyundai’s IPO adds to this momentum, making it a pivotal event not just for the automotive sector but for the broader Indian economy.

Snapshot

Hyundai’s IPO is not just a milestone for the company but also for the Indian stock market. This will be the largest IPO in India’s history, surpassing the record set by Life Insurance Corporation of India (LIC) in 2022, which raised ₹21,008 crore. The primary objective of the IPO is to increase Hyundai’s brand visibility and enhance its standing in India’s rapidly growing automotive sector.

By going public, Hyundai Motor India aims to strengthen its market presence, signaling confidence in the country’s economic growth and its own future. The move is also expected to attract significant investor interest, as India’s automotive industry continues to expand rapidly.

For Indian investors, Hyundai’s IPO offers an opportunity to participate in the success story of a company that is a key player in the nation’s automotive sector.

Hyundai Motor India’s IPO is shaping up to be a landmark event in the Indian stock market, promising strong investor interest and record-breaking numbers. With its listing, Hyundai is set to enhance its brand image while offering Indian investors a chance to ride along on its growth trajectory. Keep an eye out for October 15, as this IPO could set the stage for further momentum in the market during the festive season.