The initial public offering (IPO) of Hyundai Motor India saw a muted response from the investors during the third and final day of the bidding process but the QIB push got the issue to sail through. India’s largest-ever primary market offering was booked 18 per cent on day one and ended the second day of bidding with a total 42 per cent subscription.
Read More: Stock Market Updates: Sensex Rises 100 Points, Nifty Below 25,000; Bajaj Auto Tanks 8%
Hyundai Motor India is selling its shares in the price band of Rs 1,865-1,960 apiece. Investors can apply for a minimum of seven shares and its multiples thereafter. It is looking to raise Rs 27,856 crore via IPO, making it the largest ever IPO in Indian markets. It is entirely an offer-for-sale (OFS) of 14,21,94,700 shares by its South Korean parent Hyundai Motor Company.
According to the data from BSE, the investors made bids for 12,05,74,825 equity shares, or 1.21 times, compared to the 9,97,69,810 equity shares offered for the subscription by 01.55 pm on Thursday, October 17. The three-day bidding for the issue, which kicked off on Tuesday, October 15, concludes today.
The allocation for qualified institutional bidders (QIBs) was subscribed 3.18 times, while the portion reserved for employees saw a subscription of 1.56 times. The allocation for retail investors and non-institutional investors (NIIs) were booked 44 per cent and 37 per cent, respectively as of the same time.
Read More: Sebi To Auction 27 Properties Of Rose Valley Group Worth Rs 63.26 Crore
Chennai-based Hyundai Motor India is a part of South Korea’s Hyundai Motor Group, which is the third largest auto original equipment manufacturer (OEM) in the world based on passenger vehicle sales. It manufactures and sells four-wheeler passenger vehicles, including models such as sedans, hatchbacks, SUVs, and electric vehicles (EVs).
The grey market premium (GMP) for Hyundai Motor India has been falling consistently, since the official announcement of the issue. Last heard, the company was commanding a premium of Rs 15-20 in the unofficial market, suggesting a listing pop of less than a per cent for the investors. The GMP stood at Rs 45 earlier.
HMIL has significantly expanded its presence in the SUV segment, which now accounts for 67.41 per cent of its total domestic sales. In the past two years, the PV market experienced significant growth, but recently demand has slowed. Inventory levels at showrooms have risen from 28 days to 70 days, indicating a potential imbalance between supply and demand, said Choice Broking.
Read More: Mukesh Ambani biggest Diwali gift to 3700000 shareholders, stock dividend to be credited on…
“HMIL is seeking an P/E ratio of 25.6 times, which is in-line to its peer average. Thus, the issue is fully priced. The company has reported profitable business growth and is consistently paying dividends. Further, with capacity expansion, new PV launches and focus on premiumization, the company is well placed to benefit in the long-term,” it said ‘subscribe for long-term’ tag.
Ahead of its IPO Hyundai Motor India raised Rs 8,315.3 crore from 225 anchor investors by allocating 4.24 crore shares to 225 funds at Rs 1,960 apiece. Hyundai India reported a net profit of Rs 1,489.65 crore with a revenue of Rs 17,567.98 crore for Q1FY25. It reported a net profit of Rs 6,060.04 crore with a revenue of Rs 71,302.33 crore for the year ended on March 31, 2024.
Hyundai Motors is the second largest auto OEM in India and the leading exporter of passenger vehicles. It outshines the market with their wide product offerings; stakeholder relationships and operations; ability to leverage new technologies to enhance operational and manufacturing efficiency; ability to expand into new businesses such as EVs, said Hensex Securities.
“Hyundai Motor India has signed an agreement with the government of Tamil Nadu to invest Rs 20,000 crore over the next decade. In the following 4 years, Hyundai Motor India maintained 14-17 per cent share within the domestic market. We recommend a ‘subscribe’ to the issue for a long-term investment perspective,” it said.
The issue includes a reservation of 7,78,400 equity shares for the eligible employees of the company, who will get a discount of Rs 186 per share. Hyundai Motor India has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) have 15 per cent of the allocation. Retail investors will get the remaining 35 per cent.
Hyundai Motor India has a robust sales and service network, with dealerships and service centres located across the country. The company is also committed to sustainability, offering electric and hybrid vehicle options and actively working towards reducing its carbon footprint through various green initiatives, said Ventura Securities with a ‘subscribe’ rating.
HMIL has been the second largest auto OEM in the Indian passenger vehicles market & have pan-India sales and distribution and after-sale services network offered by company’s dealers. Company have digitised its customers and dealers’ interactions with each other and with company, said Hem Securities with a ‘subscribe for long term’ recommendation.
Kotak Mahindra, JP Morgan India, Citigroup Global Markets India, HSBC Securities & Capital Markets and Morgan Stanley India are the book running lead managers of the Hyundai Motor IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with October 22, Tuesday as the tentative date of listing.
