India's Biggest IPO? Hyundai Motor India Eyes $3 Billion Offer with SEBI Nod

Did you analyze that 1 out of every four Hyundai vehicles globally is sold in India, making it a key increasing driving force for the automaker?

In a landmark event for the Indian car industry, Hyundai Motor India Limited has received approval from the Securities and Exchange Board of India (SEBI) for its upcoming and most anticipated initial public offering (IPO) valued at approximately $3 billion. This IPO is poised to emerge as the most important in India's history, surpassing the preceding file set by way of Life Insurance Corporation (LIC) with its $2.7 billion listing in 2022.

Background and Significance

Hyundai Motor India, a subsidiary of the South Korean automotive industry, a major contender within the Indian car manufacturer market from the inception in 1996. The company is mainly famous for popular models and products like the Santro, Creta, and Venue, Hyundai has presented itself as a prominent household name in India. Moreover, the company is the largest exporter of passenger car vehicles from India.

The decision to head towards the public comes at a time when the Indian automobile market is witnessing a resurgence put up-pandemic. The IPO aims to raise the funds range to enhance Hyundai's marketplace presence, visibility, and brand portfolio recognition. Additionally, it'll provide liquidity and a public market for the company's equity shares in India. 

Details of the IPO

The Hyundai upcoming IPO plans to comprise the sale of over 142 million equity shares with a face value of ₹10 every share. The enterprise is targeting a valuation component and comes valued among $18 billion and $20 billion (Rs 1.5 trillion and Rs 1.7 trillion). The funds raised would be utilized for some structured as well organized strategic initiatives and projects, including expanding cars manufacturing capacity parts, making an investment in new technology and upbringing advancement, and improving the business enterprise's research and development abilities and further working operations.

Hyundai Motor India has assigned a consortium and group of leading financial institutions to manage the IPO i.e, Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital, and Morgan Stanley are a few of the advisors for this monumental initial public offering.

India: A Key Market for Hyundai

India has emerged as an increasingly essential market for Hyundai. Hyundai has been clocking regular month-to-month sales of round 60,000 units, while the broader enterprise faces challenges. Hyundai is also the most effectively important foreign vehicle manufacturer that has correctly maintained a substantial foothold in India, as different global giants like Ford and General Motors exited the marketplace after suffering for years.

Financial Performance

Hyundai Motor India has established sturdy financial performance over time. In FY23, the company reported sales of ₹61,436.64 crores, an extensive growth from ₹47,966.05 crores in 2022. The net earnings for FY23 stood at ₹4,709.25 crores, up from ₹2,901.59 crores within the previous comparison with last year. This increase may be attributed to the sturdy sales of its popular model and the growing demand for SUVs and electric powered vehicles (EVs).

The enterprise recorded the highest-ever domestic sales of 602,000 units in 2023, marking a 9% year on year growth and this increase. Hyundai's market share in India has remained solid at around 15-17% considering 2008. The strong performance pushed through compact and mid-size SUVs, especially the Creta, Exter, and Venue models.

Financials (in ₹ Crs)	FY21	FY22	FY23
Revenue	41,404	47,966	61,436
Profit after Tax	1,881	2,901	4,709
Net worth	15,311	16,856	20,054
Total Assets	26,730	28,358	34,753
Total Borrowings	1,341	1,140	1,158

Hyundai’s major decision to head public is part of a broader approach to align its valuation with international and regional peers. Maruti Suzuki, the most important automaker in India with a 41% market share, currently boasts a market capitalization of $48 billion, with a price-to-earnings (P/E) ratio of 22.6 instances for FY25. Comparatively, Hyundai’s parent company in Korea is worth $39.6 billion. If Hyundai Motor India achieves its targeted marketplace cap of $18-20 billion via the IPO, it might constitute around forty 45-50% of the figure enterprise’s consolidated value. This would probably appeal to tremendous interest from investors who apprehend the company’s stronghold in India’s auto enterprise.

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Peer Comparison based on KPIs:

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The Shift Toward Electric Vehicles

The global automotive enterprise is moving closer to  cleaner, extra sustainable technologies. India, too, is experiencing this growing demand for Battery Electric Vehicles (BEVs) and Hybrid Electric Vehicles (HEVs), despite the fact that penetration of those vehicles stays extraordinarily low.

Hyundai is able to position itself to capitalize on this trend. While competition like Tata Motors and Mahindra have already made massive strides in the BEV area, Hyundai's decision to recognize HEVs may want to offer it with a competitive aspect in an evolving market.

Analysts from Nomura project that calls for EVs and HEVs in India will develop swiftly over the following decade, as government projects and patron choices shift in the direction of eco-friendly mobility options. Hyundai’s established popularity and various product portfolio put it in a strong role to capture a sizable share of this rising market.

Investment Potential: Why Investors Should Watch This IPO

Hyundai Motor India’s IPO gives big potential for investors, particularly the ones looking to advantage publicity to the unexpectedly growing automobile and EV sectors in India. Here’s understand why this IPO stands out:

1. EV Growth Opportunity: Hyundai’s formidable EV plans align with the Indian government’s push for purifier, greener transportation. With favorable guidelines and subsidies, the EV market is predicted to develop exponentially, making Hyundai’s early investment in this area notably appealing.

2. Strong Financials:  Hyundai Motor India has reported robust financial performance, with sales crossing ₹80,000 crore ($9.6 billion) in 2023. The company’s regular profitability and low debt make it a financially sound investment.

3. Global Backing: Being a subsidiary of Hyundai Motor Corporation, one of the world’s biggest automakers, Hyundai Motor India has extensive and various resources including global expertise, cutting-edge technologies, and a sizable distribution network.

4. Diversified Product Range:  Hyundai’s portfolio spans with a wide variety of new models, from affordable cars to luxury SUVs. This diversity delivers the enterprise to numerous segments of the Indian market, making it much less at risk of economic downturns.

5. Export Market Strength: Hyundai Motor India’s focus on exports offers it a unique benefit. The organization exports to over 90 nations, which allows hedging towards risks related to a slowdown in the domestic market.

Market Impact and Future Prospects

The approval of Hyundai's IPO by SEBI is a testimony to the enterprise's strong financial health and increased possibilities. Analysts consider that Hyundai Motor India merits a valuation top rate over its competitors, which include Maruti Suzuki, due to its strong market position and consistent performance.

The IPO is anticipated to attract enormous interest from domestic and global investors, given Hyundai's mounted brand and market management. The successful listing will not enhance Hyundai's financial capabilities but also set a brand new benchmark for future IPOs in India.

Conclusion

Hyundai Motor India's $3 billion IPO marks a considerable milestone within the Indian automotive and financial markets. As the most important IPO in India's history, it underscores the developing investor confidence in the Indian economic system and the automobile sector. With SEBI's nod, Hyundai is about to embark on a new journey of growth and significant expansion, similarly solidifying its position as a market leader.