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Hyundai Motor India Plans Blockbuster IPO: Comparative Analysis and Financial Insights, (SEBI), Estimates Place it Between $2.5 billion to $3 billion

A comprehensive examination of Hyundai Motor India’s upcoming IPO, its strategic objectives, and its competitive positioning vis-à-vis industry peers Maruti Suzuki, Tata Motors, and Mahindra & Mahindra.

Hyundai Motor India Ltd. (HMIL) is preparing for a significant milestone with its impending initial public offering (IPO), set to potentially become one of India’s largest public issues. While the exact fundraising target remains undisclosed in the draft red herring prospectus (DRHP) submitted to the Securities and Exchange Board of India (SEBI), estimates place it between $2.5 billion to $3 billion, potentially surpassing LIC’s record-setting $2.46 billion IPO in May 2022.

Hyundai Motor India IPO Details

Sources familiar with the IPO process indicate that HMIL plans to conduct a pure offer for sale (OFS) of 142,194,700 equity shares, representing 17.5% of the post-offer paid-up equity share capital. Unlike a fresh issue, the proceeds from this OFS will not benefit HMIL directly but rather its parent company, Hyundai Motor Company. Retail investors are expected to have access to 35% of the total equity on offer.

Strategic Implications and Market Position

The IPO is seen as a strategic maneuver to enhance HMIL’s market visibility, fortify its brand image, and provide liquidity through a public market for its shares. The involvement of prominent book-running lead managers (BRLMs) such as Kotak Mahindra Capital, Citigroup Global Markets, HSBC Securities, JP Morgan, and Morgan Stanley underscores the significant anticipation and interest surrounding the IPO.

Comparison with Industry Peers

HMIL presently ranks as India’s second-largest automaker, trailing only Maruti Suzuki India. The IPO is poised to reposition HMIL favorably against its peers, offering potential advantages in future fundraising and reducing dependency on its Korean parent company.

Financial Performance and Operational Strategy

In fiscal year 2023, HMIL reported robust financial metrics, including a revenue of ₹60,000 crore and a net profit of ₹4,653 crore, placing it prominently among non-listed car manufacturers in India. Operational highlights include a 7% year-on-year increase in total sales for May 2024, with exports growing significantly by 31% over the same period.

Hyundai Motor India IPO: Comparison of Hyundai Motor India with its listed peers Maruti Suzuki India, Tata Motors, and M&M (Source: DRHP filed by Hyundai Motor India)
Hyundai Motor India IPO: Comparison of Hyundai Motor India with its listed peers Maruti Suzuki India, Tata Motors, and M&M (Source: DRHP filed by Hyundai Motor India)

Overview of Industry Peers

  • Maruti Suzuki India: Leading the market with a market capitalization exceeding ₹4 trillion, Maruti Suzuki posted robust financials in FY24, with net sales reaching ₹1,34,937.8 crore and a notable 64% increase in net profit.
  • Tata Motors: Recently surpassed by M&M as India’s second-largest auto firm by market cap, Tata Motors reported significant growth, driven by strong performances from its luxury car unit, Jaguar Land Rover (JLR), in FY24.
  • Mahindra & Mahindra (M&M): Emerging as the second-largest auto giant in India, M&M plans substantial capex to bolster its domestic and global market presence, emphasizing growth beyond the industry average by fiscal 2027.

In conclusion, HMIL’s IPO marks a pivotal moment for the Indian automotive sector, promising to redefine its competitive landscape and capital market dynamics.

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