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Journalism of Courage
Hyundai Motor India Ltd, which will come out with India’s largest initial public offering (IPO) of Rs 27,870 crore ($ 3.3 billion) on October 15, has proposed to invest Rs 32,000 crore over the next ten years as part of its India growth strategy.
The automaker is planning to invest Rs 6,000 crore in a new plant in Pune which will increase its capacity from 0.824 million to 1.1 million, the company said on Wednesday, adding that the 30 per cent capacity addition will boost its domestic and export volumes. Hyundai will invest aggressively in new products, future technology and research and development capabilities of the India unit, according to Unsoo Kim, Managing Director, Hyundai Motor India.
Hyundai expects India to be a fast-growing market and plans to make it a global manufacturing hub, he said in Mumbai.
The Hyundai IPO will be the largest share offering in the history of the Indian capital market. The company has fixed the price band of the IPO in the range of Rs 1,865 to Rs 1,960 per equity share of the face value of Rs 10, valuing the company at around Rs 1.5-1.6 lakh crore.
The IPO will close on October 17. The allocation to anchor investors for the IPO is scheduled to take place on October 14.
Public sector LIC’s IPO of Rs 21,000 crore in 2022 was the largest IPO in India before the Hyundai offering. Prior to this, PayTM launched a Rs 18,300 crore mega IPO in 2021.
Hyundai, the second largest automaker in India after Maruti, will be the first auto firm to go public in two decades after Maruti Suzuki’s listing in 2003.
The IPO comprises an Offer for Sale of up to 14.21 crore equity shares of face value of Rs 10 each by the promoter selling shareholder. Hyundai Motor Company of South Korea will get the entire proceeds of Rs 27,870 crore ($ 3.3 billion).
The offer would constitute 17.50 per cent of the post-offer paid-up equity share capital of the company. “The promoter will be entitled to the entire proceeds of the offer after deducting its portion of the offer expenses and relevant taxes thereon. Our company will not receive any proceeds from the offer,” the offer document says.
According to the offer document, investors can apply for a minimum of one lot size or seven shares worth Rs 13,720 and in multiples after that. The company has set aside 50 per cent of the net issue for qualified institutional buyers or QIBs, 15 per cent for non-institutional investors (NIIs) and 35 per cent for retail individual investors.
According to the company, since 1998 and up to March 31, 2024, the company has cumulatively sold nearly 12 million passenger vehicles in India and through exports. It’s the third largest auto OEM in the world based on passenger vehicle sales in CY2023, according to a CRISIL report.
Hyundai has been India’s largest exporter of passenger vehicles from fiscal 2005 to the first 11 months of fiscal 2024, having exported the highest cumulative number of passenger vehicles for the same period, says the CRISIL report.
The company posted a total income of Rs 71,302 crore for the 12 months ended March 2024 and a profit of Rs 6,060 crore. The total income stood at Rs 61,436 crore and profit at Rs 4,709 crore for FY2023, according to the prospectus.
