Hyundai’s IPO Set to Break Records: India’s Second-Largest Car Manufacturer Plans Rs.25,000 Crore Offering

Hyundai Motor India Limited (HMIL), a Korean car manufacturer, is gearing up for a landmark initial public offering (IPO) in India. This IPO launch, potentially the biggest in the country’s history, involves selling approximately 17% of its stake in its Indian subsidiary. The IPO is expected to raise up to Rs.25,000 crore (around $3 billion), valuing the company at an impressive $18 billion (Rs.1.5 lakh crore).

IPO Details

HMIL’s draft red herring prospectus (DRHP), filed with SEBI on June 14, 2024, outlines an offer-for-sale (OFS) of 142.2 million equity shares priced at Rs.10 each. The shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The allocation is structured with 50% of shares going to qualified institutional buyers (QIBs), including anchor investors, 35% to retail individual investors, and 15% to non-institutional investors.

Unlike previous major IPOs, such as LIC’s Rs.21,000 crore offering in 2022, Hyundai’s IPO does not reserve shares for employees or offer any discounts. This contrasts with the LIC IPO, which allocated 1% of shares to its employees and provided a Rs.45 discount per share.

Reasons for the IPO

Hyundai’s decision to launch this IPO is driven by the plan to tap into India’s burgeoning market potential and boost its valuation. The company plans to address the so-called “Korean Discount,” which refers to the lower valuations of South Korean firms compared to their global counterparts. By listing its Indian subsidiary, Hyundai seeks to achieve a better valuation and attract a broader investor base.

Financial Performance & Market Position

HMIL has made major investments in its Indian operations, totaling $5.04 billion (about Rs.29,740 crore) since inception. For FY23, the company reported a revenue of Rs.59,761 crore and a net worth of Rs.19,778 crore. Its FY24 market share in the passenger car segment stands at 14.5%, making it the second-largest car manufacturer in India. Hyundai’s popular Creta model dominates the mid-size SUV segment with a 30% market share.

Conclusion: In conclusion, The upcoming Hyundai IPO marks a milestone in India’s equity market. With a valuation of $18 billion and an aim to pump up its market recognition and share, HMIL’s IPO seems poised to set new records and offer an opportunity for investors.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.