The much-awaited Hyundai Motor India Limited IPO opened for subscription on October 15, 2024, with the closing date set for October 17, 2024. This book-built issue aims to raise ₹27,870.16 crores, consisting entirely of an offer for sale (OFS) of 1,421.94 lakh shares. The IPO price band has been set between ₹1,865 to ₹1,960 per equity share, with investors required to apply in lots of 7 shares each. The minimum investment for retail investors stands at ₹13,720, while High-Net-Worth Individuals (HNIs) must apply for at least 15 lots (105 shares), amounting to ₹2,05,800.

IPO Details and Timeline

The allotment of shares for the Hyundai Motor India IPO is expected to be finalized on or around October 18, 2024, with the listing likely to take place on the BSE and NSE on October 22, 2024. Investors can check the allotment status online through the registrar's portal—KFin Technologies Limited—from the allotment date. Hyundai Motor India has raised ₹8,315.27 crores from anchor investors at the upper price band of ₹1,960 per share, a strong indicator of institutional interest.

Financial Performance and Valuation Concerns

Financially, Hyundai Motor India has demonstrated consistent growth. In Fiscal 2024, the company's revenue was ₹7,13,023.25 million, up from ₹6,14,366.42 million in Fiscal 2023 and ₹4,79,660.48 million in Fiscal 2022. The EBITDA for Fiscal 2024 stood at ₹91,326.16 million, showing a steady increase from ₹75,487.80 million in 2023. The Profit After Tax (PAT) for Fiscal 2024 was ₹60,600.44 million, up from ₹47,092.50 million in the previous fiscal. Despite these solid numbers, several concerns have emerged regarding Hyundai Motor India’s IPO valuation.

Hyundai Motor India holds just a 6% share of total industry sales and 8% of profits, yet the company is seeking 42% share in market capitalization. In comparison, competitors like Maruti Suzuki, which holds 40% market share, and Tata Motors, trading at a lower PE ratio of 11x, create valuation discrepancies. The post-issue PE ratio of Hyundai Motors is 26.28x, which matches Maruti’s valuation, despite Hyundai controlling only 14-15% of India’s market. This has led some analysts to caution investors about overvaluation.

Risks and Concerns

Investors should also be aware of several risks:

  * Increased Royalty Payments: The parent company, Hyundai Motor Company (HMC), might raise royalty charges, which could hurt profitability.

  * High Promoter Holding: Even after the IPO, the promoters will retain an 82.5% ownership stake, with an additional 7.5% stake sale pending. This could put pressure on the stock price in the future.

  * Competition from Kia Motors: Hyundai faces stiff competition from its sister brand, KIA Motors, which could limit its market share growth.

Grey Market Premium and Subscription Status

As of October 15, 2024, the Grey Market Premium (GMP) for Hyundai Motor India is ₹0, suggesting that listing gains may be limited. Additionally, the IPO's live subscription status shows a 0.12x subscription on the first day, reflecting tepid demand. Grey Market activity, though often an indicator of listing performance, is not always reliable. However, the lack of trading activity and absence of a Grey Market Premium could signal investor caution.

Allotment and How to Check Status

The allotment date for Hyundai Motor India IPO is scheduled for October 18, 2024. To check your allotment status:

  * Visit the registrar's official website.

  * Select Hyundai Motor India Limited IPO from the dropdown.

  * Enter your Application Number, PAN, or DP Client ID.

  * Submit the details to view your allotment status.

Expert Analysis and Recommendation

Despite Hyundai Motor India’s strong financials, the high valuation, competition from KIA, and risk of increased royalty payments raise concerns about long-term growth prospects. Unlike Maruti Suzuki, which went public earlier in its growth cycle, Hyundai is only now seeking public funds after already capturing a significant market share. Therefore, investors are advised to proceed with caution.

For investors seeking listing gains, the absence of a Grey Market Premium may suggest limited upside potential. Furthermore, the company's high PE ratio and promoter holding could limit near-term price appreciation.

Conclusion

Overall, Hyundai Motor India’s IPO offers a mix of steady financial growth and significant risks tied to valuation and competition. Investors with a long-term horizon may want to consider the fundamental strengths of the company, but those looking for immediate gains may be disappointed. Therefore, it may be prudent to Avoid this IPO for now unless you have a strong conviction about the company's future growth prospects.

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