Hyundai Motor India Limited (HMIL), a wholly-owned subsidiary of Hyundai Motor Company (HMC), is set to launch its Initial Public Offering (IPO), marking a significant event in the Indian stock market. The IPO, amounting to ₹27,870.16 crores, consists entirely of an offer for sale of 1,421.94 lakh shares. The subscription period is from October 15, 2024, to October 17, 2024, with allotment expected to be finalized around October 18, 2024. The shares are set to be listed on the BSE and NSE, with a tentative listing date around October 22, 2024.

IPO Details

The price band for the Hyundai Motor India IPO is established between ₹1,865 to ₹1,960 per equity share, with a minimum lot size of 7 shares. Retail investors are required to invest a minimum of ₹13,720, while High-Net-Worth Individuals (HNIs) must invest in at least 15 lots (105 shares), amounting to ₹2,05,800.

Lead Managers and Registrar

The IPO is managed by prominent book-running lead managers including Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities, J.P. Morgan India, and Morgan Stanley India. The registrar for the issue is KFin Technologies Limited.

Grey Market Premium (GMP)

Currently, the Grey Market Premium (GMP) for Hyundai Motor India Limited IPO is anticipated to be ₹0, indicating no expected listing gains based on the company’s financial performance. It’s essential to note that the GMP reflects unorganized trading conditions and should be viewed as educational information rather than a trading strategy.

Live Subscription Status

As of October 15, 2024, the Hyundai Motor India IPO is open for subscription, with real-time updates available for investors interested in tracking the live subscription status.

Anchor Investors Report

Hyundai Motor India has successfully raised ₹8,315.27 crore from anchor investors at a price of ₹1,960 per share, allocating 42,424,890 equity shares. This reflects strong institutional interest in the IPO.

Allotment Date and Process

The allotment date for Hyundai Motor India IPO is scheduled for October 18, 2024. Investors can check their allotment status by visiting the registrar's website and entering their application number, PAN, or DP Client ID.

Financial Performance Overview

Hyundai Motor India has demonstrated consistent growth over the past few years:

Revenue for FY 2024 was ₹7,13,023.25 million, compared to ₹6,14,366.42 million in FY 2023 and ₹4,79,660.48 million in FY 2022.

EBITDA figures show similar upward momentum: ₹91,326.16 million for FY 2024, ₹75,487.80 million for FY 2023, and ₹54,860.89 million for FY 2022.

Profit after Tax (PAT) for FY 2024 stood at ₹60,600.44 million, up from ₹47,092.50 million in FY 2023 and ₹29,015.91 million in FY 2022.

The company’s pre-issue EPS is ₹74.58, and its post-issue EPS remains the same. The pre-issue P/E ratio is 26.28x, which aligns with the industry standard but raises concerns regarding its premium valuation compared to competitors.

Investment Concerns

Despite the positive financial performance, several risks and concerns warrant attention:

Increased Royalty Payments: HMC could raise royalty charges, potentially impacting profitability.

High Promoter Holding: Post-listing, promoters will retain 82.5% ownership, with a pending 7.5% stake sale that could increase supply pressure.

Missed Wealth Creation: Unlike competitors like Maruti Suzuki, Hyundai's IPO comes after fully capitalizing on growth potential.

Competition from KIA Motors: Direct competition may hinder market share growth.

Valuation Concerns: Hyundai holds only 6% of total industry sales and 8% of profits but seeks a 42% market cap share.

PE Valuation Mismatch: With a 14-15% market share in India, Hyundai's demand for a 27x P/E ratio seems high compared to competitors like Tata Motors and Mahindra & Mahindra.

Conclusion

Given the current financial performance and the valuation concerns highlighted, the Hyundai Motor India Limited IPO presents a cautious investment opportunity. The Grey Market Premium suggests limited short-term gains, leading us to recommend that investors avoid this IPO for immediate listing gains or long-term investment purposes.

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