Hyundai Motor India IPO Review

Hyundai Motor India Limited (HMIL), is a wholly owned subsidiary of Hyundai Motor Company (HMC). In line with HMC’s global brand vision of ‘Progress for Humanity’ they adopt sustainable and green manufacturing operations, offering mobility solutions with industry leading technology.

Financially, Revenue in Fiscal 2024, Fiscal 2023 and Fiscal 2022 was ₹7,13,023.25 Million, ₹6,14,366.42 Million and ₹4,79,660.48 Million, respectively. The EBITDA for the Fiscals 2024, 2023 and 2022 were ₹91,326.16 Million, ₹75,487.80 Million and ₹54,860.89 Million respectively. The Profit after Tax for the Fiscals 2024, 2023 and 2022 were ₹60,600.44 Million, ₹47,092.50 Million and ₹29,015.91 Million respectively. This indicates steady growth in financial performance.

For the Hyundai Motor India IPO, the company is issuing shares at a pre-issue EPS of ₹74.58 and a post-issue EPS of ₹74.58. The pre-issue P/E ratio is 26.28x, while the post-issue P/E ratio is 26.28x against the P/E ratio is 23.57. The company's ROCE for FY24 is 62.90% and RoE for FY24 is 56.82%. These metrics suggest that the IPO is fairly priced.

But if we look at some other factors, then there are some concerns too:-
1. Risk of Increased Royalty Payments: The parent company may raise royalty charges, which could impact profitability.

2. High Promoter Holding and Pending Stake Sale: Even after listing, promoters will retain 82.5% ownership, with a 7.5% stake sale still pending. This could increase supply pressure in the market later.

3. Missed Wealth Creation Opportunity: Unlike Maruti Suzuki, which offered substantial early gains, Hyundai Motors is going public only after fully capitalizing on its growth potential.

4. Competition from Group Company KIA Motors: Hyundai faces direct competition from its sister brand, KIA Motors, which could limit its market share growth.

5. Valuation Concerns: Hyundai Motors India holds just a 6% share of total industry sales and 8% of profits, yet it is seeking a 42% share in market capitalization.

6. PE Valuation Mismatch: With a market share of 14-15% in India, Hyundai is demanding a PE ratio of 27x, the same as Maruti Suzuki, which holds 40% market share. In comparison, Tata Motors trades at a PE of 11x, and Mahindra & Mahindra at 35x.

The Grey Market Premium (GMP) of Hyundai Motor India showing potential listing gains of 0%. Given the company's financial performance and the valuation of the IPO, we recommend Investors to Avoid to the Hyundai Motor India Limited IPO for Listing gain or long term investment purposes.

Disclaimer: The information provided in this IPO review is for educational and informational purposes only and should not be construed as financial advice or an offer to buy or sell securities. The review must not be used as a singular basis of any investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor; readers are requested to take professional advice before investing. Nothing in this document should be construed as investment advice. The content is based on publicly available information and market perceptions as of the date of publication and is subject to change. Neither the author nor the website is responsible for any losses or damages arising from the use of this information. 

About the Author
CA Abhay Kumar (Also known as CA Abhay Varn) is a qualified Chartered Accountant by profession and cleared CA at age 21. He is a SEBI Registered Research Analyst with Registration Number - INH300008465. He Possesses 8+ years of experience in the Stock Market Field and has also worked in Big CA firms during the training period. He is good at Technical analysis and Fundamental Analysis and uses both Technical and Fundamental analysis along with five other important factors that affect the movement of the Market namely Global Market Analysis, Upcoming Event Analysis, Institutional Money Analysis, Derivative Data Analysis, and Emotions and Sentiment of Traders and Investors in his Framework called - Technical Fundamental GUIDE to find the winning Trades.
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