Hyundai Motor Company is one of the leading automotive manufacturing companies, which is based in South Korea. Its Indian subsidiary Hyundai Motor India Limited (HMIL) is likely to launch its IPO which may turn out to be the biggest IPO ever seen in the Indian stock market.
Let’s explore more about the potential Hyundai IPO for online investing.
About the Hyundai IPO
Hyundai Motor’s Indian subsidiary, Hyundai Motor India Limited (HMIL), has applied for regulatory permission to list its upcoming IPO, which can be the nation’s largest IPO.
This involves selling up to 17.5% stakes of its South Korean parent company. It will be the first carmaker company to go public in India in two decades after Maruti Suzuki which was listed in 2003.
Based on the reports, Hyundai intends to raise between $2.5 to 3 billion, with a projected $30 billion valuation. This would place it among the biggest IPOs to emerge from India following the LICs recent $2.5 billion IPO in 2022. Based on the SEBI filing, the IPO is an Offer-for-Sale of approximately 142,194,700 shares, in which the parent company will sell its shares. There won't be any fresh issue of equity shares.
For the Hyundai IPO, the book-running lead managers are Kotak Mahindra Capital Company Ltd, Citigroup Global Markets India Private Ltd, HSBC Securities and Capital Markets (India) Private Ltd, J.P. Morgan India Private Ltd, and Morgan Stanley India Company Private Ltd while the registrar is KFin Technologies Ltd.
Recent Financial Performance
Here is the financial performance of Hyundai as per its Restated Consolidated Statement of Profit and Loss.
| Parameter | 9 Months Ending December 31, 2023 (in Rs. Million) | FY 2023 (in Rs. Million) | FY 2022 (in Rs. Million) |
| Total Income | 532,980.88 | 614,366.42 | 479,660.48 |
| EBITDA | 66107.74 | 75,487.80 | 54,860.89 |
| Profit Before Tax | 59,802.59 | 63,455.75 | 37,722.06 |
| Profit for the Period | 43,828.71 | 47,092.50 | 29,015.91 |
Apart from this, the company's sales for the fiscal year 2023–24 reached a record-breaking 7,77,876 units, increasing 8% from the previous year's 7,20,565 units.
The car manufacturer shipped 6,14,721 vehicles to its dealers in the domestic market, an 8% rise from the 5,67,546 units it shipped in FY 2022–2023. Its exports also increased by 7% in 2023-24.
Strengths of Hyundai Motors
Several factors are believed to be driving Hyundai's decision to consider an IPO in India:
- Market Leadership: Since 2009, Hyundai has emerged as the second-largest auto OEM in India's passenger vehicle industry. The company's best-selling models are Creta and Verna, which rule their respective markets.
- Export Leadership: Since 2005, Hyundai has been India's top exporter of passenger cars. 3.53 million passenger cars have been exported by the company to more than 150 countries.
- Diverse Vehicle Portfolio: Hyundai provides an extensive range of vehicles across various segments, including SUVs, sedans, and hatchbacks. It also offers a variety of powertrain choices, including CNG, diesel, gasoline, and electric cars.
- Innovation and R&D: Hyundai's dedication to innovation is demonstrated by its R&D initiatives. The company is launching new technology; one such example is the speech recognition system BluelinkTM, which is customized for the Indian market.
- Broad Sales and Service Network: Hyundai boasts an extensive network of 1,366 retail outlets and 1,550 service centers spread across India.
- Digitization and Customer Experience: Hyundai has embraced digital transformation, improving the customer experience from the vehicle sale to after-sales care, with services like the "myHyundai" app.
Associated Risks with Hyundai IPO
Several risks are associated with Hyundai's decision to consider an IPO in India:
- Market and Economic Fluctuations: The automobile industry is quite susceptible to changes in the economy. Variations in consumer purchasing power or economic downturns may have an effect on car sales and profitability.
- Regulatory Risks: Modifications to laws, rules, and environmental regulations can have an impact on the cost of production. Compliance with new regulations could require substantial financial investments.
- Disruptions to the Global Supply Chain: Geopolitical tensions, natural disasters, and other causes can cause disruptions to the global supply chain for automobile parts.
- Technological Advancements: Constant investment in R&D is necessary due to the quick development of automobile technology. The inability to stay up to date with technical advancements could impact a company's ability to compete in the market.
To Wrap Up
The potential IPO of Hyundai is a significant event and if successful, it will be a confirmation that India is the next ‘hot’ country for investment and a viable hub for automobile manufacturing. It is important to note that there are several challenges and risks involved with the IPO which should be assessed along with its potential strengths.
Disclaimer: No Business Standard Journalist was involved in creation of this content