India’s biggest IPO: What’s there to know about the Hyundai issue

Issue Size

The 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. It is also offering a maximum employee discount of Rs 186 per equity share.

The allocation to anchor investors for the IPO is scheduled to take place on October 14, which will close on October 17, with listing on both NSE and BSE on October 22.

Moving forward, HMI will focus on both volume and profitability led by improvements in higher level of utilisation and localisation, its managing director (MD) Unsoo Kim said at a press briefing Friday. Kim also said India’s electric vehicle (EV) market is in “the early stage of electrification” but will “grow strongly and steadily by 2030”. According to him, HMI will leverage access to its parent company’s EV and battery technologies to develop an EV ecosystem in India.

“We are planning to launch four EV models across mass and premium segments, including our Creta EV in Q4 this financial year. Also, we are localising the EV supply chain, like the battery pack, drivetrain, etc. and we’re investing in the EV charging infrastructure here,” Kim said.

Auto Sector Slowdown

In response to concerns over a recent slowdown in India’s auto sector, HMI’s chief operating officer (COO) Tarun Garg said there was a 40 per cent increase in registrations in September over the previous month citing Vahan data. Garg also attributed sluggish growth to high levels of growth following the Covid pandemic.

“On a broader level, the CAGR for the auto industry has been 5%. However, post COVID, because of the pent-up demand, industry saw a very huge growth. As an industry, we grew by more than 20% in 2022. Then, we grew by 9% in 2023. So obviously, some moderation will always happen. But that should not be any worrying factor,” he said.

HMI, the second largest automaker in India after Maruti Suzuki, will be the first auto firm to go public in two decades after Maruti Suzuki India Ltd’s listing in 2003. The IPO will surpass LIC’s IPO of Rs 21,000 crore in 2022 as India’s largest share offering ever.

According to HMI’s Red Herring Prospectus (RHP) filed with the Securities and Exchange Board of India (SEBI), the company sourced 78 per cent of parts and materials from within India in FY24, below 82.5 per cent in FY22. The share of SUVs out of the company’s total car sales has risen to 63 per cent in FY24, from 52 per cent in FY22.

The share of internal combustion engine (ICE) vehicles sold by the company stood at 88.2 per cent in FY24, followed by 11.5 per cent compressed natural gas (CNG) vehicles, and 0.3 per cent EVs. The share of EVs has grown 10 times since FY22, when it was 0.03 per cent.

According to the company, since 1998 and up to March 31, 2024, it has cumulatively sold nearly 12 million passenger vehicles in India and through exports. It posted a total income of Rs 71,302 crore for FY24 and a profit of Rs 6,060 crore. The total income in FY23 stood at Rs 61,436 crore and profit at Rs 4,709 crore.