Hyundai Motors To Break LIC's Record With India’s Biggest IPO, Here's How

Hyundai Motor India Ltd. (HMIL) is poised for a monumental initial public offering (IPO) that could set a new benchmark in the Indian stock market.

According to a report from Livemint, HMIL will offer up to 142.2 million equity shares, representing 17.5 per cent of the post-offer paid-up equity share capital.

While the exact amount to be raised has not been specified, bankers familiar with the IPO details suggest the carmaker aims to raise approximately $2.5 billion to $3 billion, valuing the company at $25-30 billion.

This proposed IPO could surpass the record set by the Life Insurance Corporation of India’s $2.46 billion issue in May 2022, making it the largest in the country’s history.

Additionally, the company intends to offer 35 per cent of the total equity on offer for sale in the IPO to retail individual investors, as mentioned in the DRHP.

"This IPO is crucial for both investors and the company since India is Hyundai's third-largest revenue generator after the US and South Korea. SUVs continue to drive growth for Hyundai in India, accounting for more than 62 per cent of domestic sales in 9MFY24," said Aditya Kondawar, Partner at Complete Circle Capital.

The book-running lead managers of the proposed issue are Kotak Mahindra Capital Co Ltd, Citigroup Global Markets India Pvt. Ltd., HSBC Securities and Capital Markets (India) Pvt. Ltd., JP Morgan India Pvt. Ltd., and Morgan Stanley India Co. Pvt. Ltd.

HMIL has also invited analysts to its manufacturing facility in Chennai last month to kick-start its IPO process.

At a time when rival Tata Motors has projected up to a 6 per cent increase in its market share by 2030, accounting for 20 per cent of all passenger vehicle sales by the end of the decade, investors and analysts will assess how HMIL, which derives over 60 per cent of its sales from sports utility vehicles (SUVs), is positioned in the competitive market landscape.

HMIL's IPO is a pivotal moment for the carmaker as it aims to list against established automotive giants in the country.

Although Hyundai has ample cash at the parent level, the India IPO is also intended to generate additional capital to enhance shareholder returns through dividend payouts and share buybacks.

Hyundai’s India listing confirms its decision to double down on operations in the country, including establishing a battery assembly factory and increasing production capacity via its buyout of the General Motors factory in Talegaon, Pune.

It also sets a precedent for other Korean companies seeking to expand their investor base and improve valuations through international listings.

Passenger vehicle makers are considered rich valuations in India because of increasing demand in the domestic market, especially for premium models.

Listed Indian auto companies include Maruti Suzuki India (market capitalisation of over Rs 4 trillion), Tata Motors ( Rs 3.3 trillion), and Mahindra & Mahindra ( Rs 3.6 trillion).

Hyundai Motor India has leveraged this consumer preference with utility vehicles such as Creta, Venue, and Exter, which accounted for about 60 per cent of its total domestic sales in FY24.