Hyundai Motor India Limited (HMIL) is gearing up to make history with its upcoming $3 billion initial public offering (IPO). The South Korean auto giant’s Indian subsidiary has officially secured approval from the Securities and Exchange Board of India (SEBI) for what is set to be India’s largest IPO, surpassing the record set by LIC’s $2.7 billion listing in 2022. This landmark IPO is expected to reshape India’s automotive landscape, with Hyundai Motor India positioning itself for a valuation of around $18 billion to $20 billion.
In June 2024, Hyundai Motor India filed its Draft Red Herring Prospectus (DRHP) with SEBI, signaling its intentions for a historic market debut. This article provides a deep dive into the details of this monumental IPO, the company’s background, and what it means for investors and the Indian automotive market.
Hyundai Motor India’s $3 Billion IPO: A Groundbreaking Offering
The Hyundai Motor India IPO will consist entirely of an Offer for Sale (OFS). According to the DRHP, the offering includes up to 142,194,700 equity shares with a face value of ₹10 each being sold by the Promoter Selling Shareholder. This makes it a non-dilutive offering, meaning that the proceeds will go directly to the promoter rather than the company itself. However, the benefits of the IPO extend beyond fundraising.
Hyundai Motor India has emphasized that the IPO will not only provide liquidity for existing shareholders but will also bring several benefits for the company, including enhanced visibility, a stronger brand image, and the creation of a public market for its shares in India. These factors are expected to significantly bolster Hyundai’s standing in the Indian market.
Key Players Involved in Hyundai Motor India’s IPO
Hyundai Motor India is working with some of the world’s most renowned financial institutions and law firms to ensure a successful IPO. The book-running lead managers for the IPO include Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital, and Morgan Stanley. Meanwhile, Shardul Amarchand Mangaldas serves as Hyundai Motor India’s legal counsel, while Cyril Amarchand Mangaldas represents the banks involved in the IPO. For international legal matters, Latham & Watkins is advising Hyundai Motor India.
Hyundai Motor India: A Dominant Player in India’s Auto Market
Since its inception in 1996, Hyundai Motor India has grown to become a formidable player in the Indian automotive market. The company has established itself as the largest exporter of passenger vehicles in India since Fiscal 2005, exporting the highest cumulative number of passenger vehicles from Fiscal 2005 to the first 11 months of Fiscal 2024, according to the CRISIL Report.
With nearly 12 million passenger vehicles sold in India and through exports from 1998 to March 2024, Hyundai Motor India has made an indelible mark on both domestic and international markets. Its wide-ranging product portfolio, from affordable hatchbacks to premium SUVs, has resonated strongly with Indian consumers.
Contribution to Hyundai Motor Company’s Global Sales
Hyundai Motor India plays a critical role in the global operations of its parent company, Hyundai Motor Company (HMC). In 2023, the Indian subsidiary ranked among the top three contributors to Hyundai Motor Company’s global sales volumes. Over the years, the company’s contribution to Hyundai’s overall sales has steadily increased from 15.48% in 2018 to 18.19% in 2023, underscoring the growing importance of the Indian market to the parent company.
IPO’s Impact on Hyundai Motor India and the Broader Market
The upcoming IPO is expected to significantly enhance Hyundai Motor India’s standing in the automotive industry. By listing its shares on the Indian stock exchanges, the company will gain access to a broad pool of investors, creating opportunities for further expansion and increased market penetration.
This IPO is also expected to provide an attractive opportunity for investors, especially given Hyundai Motor India’s strong financial track record, robust export capabilities, and its position as one of the most successful automobile manufacturers in India.
Growth in India’s Automotive Industry
The Indian automotive market has been on a growth trajectory, driven by increasing consumer demand, rapid urbanization, and rising disposable incomes. Hyundai Motor India has capitalized on these factors by offering a diverse range of vehicles tailored to the needs of Indian consumers. Its dominance in the compact and mid-size car segments has been particularly noteworthy.
The company has also been proactive in responding to evolving market trends. As India’s electric vehicle (EV) market grows, Hyundai Motor India has rolled out EV offerings such as the Hyundai Kona Electric, positioning itself as a leader in the country’s green mobility revolution.
Export Leadership
Hyundai Motor India has long been the leader in exports of passenger vehicles from India, accounting for a substantial share of the country’s vehicle exports. The company’s global manufacturing facility in Chennai plays a pivotal role in its export strategy, catering to over 80 countries in regions such as the Middle East, Latin America, Africa, and Asia-Pacific.
Sustainability and Innovation
Hyundai Motor India is not only focused on scaling its operations but also on incorporating sustainable practices and innovative technologies. The company has invested heavily in green technologies, including electric mobility, and continues to push boundaries in terms of fuel efficiency and emissions reductions.
Financial Metrics and Market Valuation
Hyundai Motor India’s valuation, targeted between $18 billion and $20 billion, highlights its substantial role in both the Indian and global automotive markets. The DRHP reveals that Hyundai’s market share, product diversity, and financial strength have positioned it for long-term growth.
Profitability and Revenue Growth
Hyundai Motor India’s revenue and profitability have seen consistent growth over the years. With a wide range of popular models like the Hyundai Creta, Venue, and i20, the company continues to meet the demands of Indian consumers while maintaining competitive export volumes.
IPO Size and Market Comparison
The Hyundai Motor India IPO, valued at $3 billion, will outpace LIC’s 2022 listing, making it the largest IPO in Indian history. This offering is expected to generate considerable interest from both domestic and international investors, further cementing Hyundai’s presence in the global automotive industry.
Should Investors Apply for Hyundai Motor India’s IPO?
The Hyundai Motor India IPO presents a unique investment opportunity for individuals looking to invest in a high-growth sector with a company that has a proven track record. Hyundai’s leadership in passenger vehicle exports, coupled with its strong financials, places it in a favorable position for growth.
However, potential investors should consider market conditions and individual risk tolerance before applying. While Hyundai Motor India has demonstrated consistent performance, the IPO market can be influenced by broader economic factors.
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