Hyundai Motor India Limited has become a key player in the Indian automobile sector and is coming up with a highly anticipated initial public offering (IPO). However, before you invest, it is essential to understand the key details about this large-cap automotive company: Hyundai Motor India Limited. In this blog, we provide an overview of Hyundai’s upcoming IPO, explore insights into the company, highlight its core strengths, and examine potential risks.
Hyundai IPO Details
Bidding Dates
15 Oct ’24 – 17 Oct ’24
Minimum Investment
₹ 13,720 / 1 Lot (7 Shares)
Price Range
₹ 1,865 – ₹ 1,960
Maximum Investment
₹1,92,080 / 14 Lot (98 Shares)
Retail Discount
To be announced
Issue Size
₹ 27,870.16 Cr
Investor Category and Subcategory
Qualified Institutional Buyers (QIBs) | Retail Individual Investors | Non-institutional Investors (NIIs) | Eligible Employees and Eligible ShareholdersHyundai IPO Dates
Hyundai Motor India Limited is planning to offer 14,21,94,700 equity shares, making the IPO issue size approximately ₹27,870.16 crore, positioning it as one of India’s biggest mainboard IPOs.
The issue is entirely an Offer for Sale (OFS). The Hyundai IPO will open for subscription on Tuesday, 15th October, and will close on 17th October. The price band is set at ₹1865 to ₹1960 per share, with a minimum lot size of 7 shares. After the IPO, the offered shares will represent 17.50% of company’s total equity share capital.
About Hyundai Motor India Ltd
Founded in 1996, Hyundai is a part of the global group based in Korea and is one of the leading automobile industry groups.
Their production includes a variety of passenger vehicles, ranging mostly from sedans to hatchbacks, SUVs, and electric vehicles. By offering such cars, Hyundai has emerged as one of India’s two largest automakers, by domestic sales as well as being the largest exporter, supplying cars to more than 150 countries around the world.
The company has a manufacturing plant near Chennai, capable of producing Hyundai’s whole range of passenger vehicles. Additionally, they have an R&D center in Hyderabad that caters to global R&D needs from Korea.
Peer Details:
| Company | Market Cap |
|---|---|
| Maruti Suzuki India Limited | ₹4,01,088 Cr |
| Tata Motors Limited | ₹3,45,690 Cr |
| Mahindra & Mahindra Limited | ₹3,92,240 Cr |
Things to Know Before Investing in Hyundai IPO
Strength of the company
- Wide product range: Hyundai offers a diverse range of models and electric vehicles. This lineup allows the company to appeal to different types of buyers across India, maintaining a broad customer base.
- Export leadership: Hyundai is a large exporter, sending out 3.53 million vehicles to more than 150 countries since its inception. This enables the company to serve markets in Latin America, Africa, the Middle East, and Asia, solidifying its role as a key supplier in global automobile production.
- Local R&D support: The R&D center in Hyderabad supports global research for compact vehicles. This focus on local customizations is essential for catering to Indian customer preferences, helping Hyundai remain competitive.
- Extensive sales and service network: Hyundai has established a strong presence in India, with 1,366 sales outlets and 1,550 service centers, ensuring customers can easily access sales and support in both urban and rural areas.
- Healthy financial growth: The revenue of the company has consistently grown over the years, from ₹40,972.25 crore in 2021 to ₹60,307.58 crore in 2023. This financial growth reflects strong customer demand and efficient operations.
Risks Related to the Company
- Supply chain risks: Hyundai relies on a limited number of suppliers for its parts. Any disruptions could impact production and overall operations.
- Legal challenges: Hyundai faces several legal cases, including tax claims and civil litigations amounting to ₹5,469.80 crore. Negative outcomes in these proceedings could affect the company’s financial stability.
- Single production facility: Hyundai’s manufacturing operations are concentrated in one plant in Chennai. Any disruption at this facility could significantly impact their ability to meet market demand.
- Competition from sister companies: Hyundai’s parent group includes other companies like Kia, which operate in similar market segments. This competition could affect Hyundai’s growth and market presence.
- Large focus on SUVs: A substantial part of Hyundai’s success in India is due to its SUV models. Any decline in SUV demand could negatively impact the company’s sales.
- Financial liabilities: Hyundai has borrowings of ₹784.48 crore (as of December 2023). Failing to meet these obligations could lead to financial strain.
Financial Information of the Company
| Particulars | Year ending on March 31, 2023 | Year ending on March 31, 2022 |
|---|---|---|
| Revenue from Operations (in ₹ million) | 603,075.80 | 473,784.32 |
| Profit After Tax (PAT) (in ₹ million) | 47,092.50 | 29,015.91 |
| Cash & Cash Equivalents (in ₹ million) | 177,411.47 | 141,388.42 |
| Total sales volume (x) | 720,565 | 610,760 |
| Net Worth (in ₹ million) | 200,548.18 | 168,562.55 |
| Earnings Per Share (“EPS”) | 57.96 | 35.71 |
| Total Borrowings (in ₹ million) | 11,586.00 | 11,400.33 |
| Return On Capital Employed (%) | 28.75 | 20.37 |
Source: Hyundai India RHP | Company Profile: Hyundai Motor India Limited
Conclusion
Hyundai IPO presents a good opportunity for investors seeking exposure to the automobile sector. The company has a strong foundation, offering a diverse range of vehicles, a proven track record, and impressive financial growth. However, investors should consider potential risks like supplier dependence, legal liabilities, and competition with sister companies before making any decisions. Pay close attention to the upcoming Hyundai IPO details and proceed with caution.
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