Hyundai Motor India IPO : Strategy Shift for the Automobile Industry in India
Over the years the Indian automotive industry is one of the largest in the world going through a transformation largely due to liberalization of the world economy. The sector is to grow mainly rapidly because of the following factors, which are development of EVs, emerging greener vehicle demands or needs, and digital transformation.In this new world, the IPO of Hyundai India has attracted much interest among investors, automobile lovers, and analysts. When Hyundai India prepares to shift from an entirely owned subsidiary to a public limited company the future will not be mapped merely for the company but the entire India and automotive industry.
In the following blog, we will explain why Hyundai India can go public, the importance of IPO, performance and prospects in India, and what awaits investors after this giant leap.
Hyundai Motor India : A Brief Overview
Hyundai Motor India Ltd. (HMIL) which commenced its operations in 1996 is a joint venture between Hyundai Motor Company, South Korea and International Automobile Group. Today, Hyundai India is regarded as one of the leading players on the Indian automotive market and it has become the second largest car manufacturer in India after Maruti Suzuki in the period of the last two decades.
Hyundai India has a diversified product portfolio with models present in every segment that ranges from Small cars and Sedan, SUV. Some of the top models by today’s Hyundai include Santro, i10, i20, Creta, and Venue. This policy of quality, innovation as well as after-sales service, has greatly enhanced the market position of the company.
The manufacturing division comprises a state of the art manufacturing plant located in Sriperumbudur near Chennai that has a capacity close to 700000 units per year. Hyundai India has also grown its market hugely in the export market as it exports cars to over ninety countries.
Given its strong product portfolio and emphasis on the customer, in addition to innovation strategies, Hyundai India is ready for future growth meteorites. The IPO that is expected to happen in the future will definitely have short term and long term impact on Hyundai and all its stakeholders.
Why Hyundai Motor India Is Planning To Go Public?
There could be many reasons to come up with the decision of launching an IPO as it is the case with Hyundai India too. Some of the potential reasons for the IPO could include:
- Areas of expansion and investment opportunities
Thus, there exists a huge change in the dynamics of the automotive market of India in terms of upswing demand for electric vehicles, enhanced standards of emission, and changing towards smart mobility solutions. To sustain and meet the competitors like Maruti Suzuki, Tata motors and Honda, Hyundai India will require a huge amount of capital to support its growth strategy and afford new investments in innovative technologies. The funds that this company could gain from the IPO can be used to finance production of EVs, deploy EV charging services, improve R&D and digital capabilities.
- Strengthening Market Position
Hyundai currently occupies a large market share in the automobile industry in India. However, the company has its stiff competitors in the domestic car makers like Maruti Suzuki, Tata Motors, Mahindra and many foreign car makers such as Honda, Toyota and others. The IPO might help Hyundai to build up more financial muscles that are crucial in consolidating its market standing, introducing new models and meeting new needs of consumers in India.
- Taking Advantage of the Market Highs
This has seen India achieve remarkable growth in the recent past with key factors such as sound economic structures, higher traders and investors involvement enhanced positive outlook. Hyundai India’s management may have come up with a strategic decision of going public when the market is this welcoming. IPO would help in raising capital for the company as well as help in increas- ing the firm’s visibility among the financial markets.
- Classification of Shareholding
Currently Hyundai India is a wholly owned subsidiary of Hyundai Motor Company South Korea, however going public has the potentiality to switch over from this fused control system and dilute the reliance of Hyundai India on its South Korean parent Company. It would also be a chance to attract Indian investors – both retail and institutional – to be part of the story of one of the most successful car makers in India.
Significance of Hyundai India IPO ?
The Hyundai India IPO is set to become one of the biggest stories in the Indian stock exchange. Here’s why:
- Revival to Indian automotive Industry
The automotive industry in India was having negative impacts from the COVID-19 pandemic, and Hyundai’s IPO could be the start of the improvement. A successful IPO would not only provide the company with good capital but also repeat the spirits of the investors in the sector that has gone through many risks such as disrupted supply chain, shortage of chips, and fluctuating demand.
The decision of Hyundai could also be the reason other automobile manufacturers in the world may decide to go the same way in order to get capital thus increasing competition and innovation within the industry.
- A Step Towards EV Revolution
The Indian government has been very keen on the need to eliminate the use of traditional vehicles while at the same time use clean energy to combat climate change. The Indian government has always been very sensitive to the phasing out of conventional vehicles and use of energy resources to fight climate change. Hyundai India hasn’t been left behind in this journey of producing EVs, and there is an electric SUV in the market- Hyundai Kona Electric. However an IPO can help the company to mobilize resources to expand Scale of its EV portfolio and to be a dominant player in the Indian EV market.
Hyundai’s IPO may also be attractive to investors interested in the sector specifically in the EV segment as a means of getting into a car maker that will likely experience the benefits of an increase in the use of electric cars in India.
- Potential for High Returns
Having a good execution track, an extensive range of products, and innovation, Hyundai India is a promising investment company. This was accompanied by sustainable revenues with high revenue growth rates, good profit margins, and firm market positions.
As more economic growth is still being experienced in India, the automobile industry is also transforming investors who invest in Hyundai through the IPO stands a chance of getting an appreciation of their capital and long term returns.
- Higher Market Engagement
The flotation of Hyundai’s IPO is prospective to attract common investors, corporate investors and international investors. The presence of already acclaimed car makers like Hyundai in the Indian share market can help the Indian market in reaching out to more people and can enhance the depth of Indian equity markets.
Effect on retail investors and Investing strategies
To the general public of retail investors, these new laws are a drastic change in the manner that options trading will be undertaken. Well, it is high frequency low cost trades with high margins used by many of the small traders and SEBI’s changes will force traders to go for more safer strategies. Here are some ways retail traders might adapt:
Shift to Positional Trading: Due to the restriction in regard to the weekly expiries, a number of traders may prefer to engage in position trading, instead of the high-frequency day trading that they are used to. Positional trading thus helps traders, majorly those with a trading timeframe of weeks or months, have ample of time to study the markets to enable them make appropriate decisions in the volatile times.
Diversification: One thing here that indicates that retail investors might have to look beyond options trading is that their needs may not entirely be addressed by trading options. Investing in other forms of asset classes such as stocks or mutual funds or bonds will help to offset the risk that comes with the new F&O regulations. Diversification is also beneficial because it saves the practitioner from risks of accumulating too much of one kind of financial product alone.
Hedging: It will also be seen that hedging will grow in more significance in the new trading environment. For example protective puts and covered calls are efficient to reduce the loss exposure but also provide a scope for gain. Hedging does not remove risk but does reduce the impact that unfavorable market forces may exert within the organization.
Better Cash Flow Management: As we saw, premiums are now taken upfront, which means that traders will have to think twice about their cash position. As such, it will be important for traders depending on option trading revenue to ensure that they have adequate cash to meet these initial expenses.
Reduced Speculative Trading: The higher margin requirements and larger contract sizes have the effects of demoting the retail trader to specific types of trades, specifically, high-frequency speculation. Accommodationist traders who used to achieve gains through numerous rounded up position buying and selling will now have to think of mid and long term trading or bear the brunt of loss through higher costs and risks.
Hyundai Motor India IPO Details
Hyundai Motor India IPO is a Book built issue of 27,870.16 crore. The case is purely on a rights offer for sale of 14.22 crore equity shares.
Hyundai Motor India IPO can be subscribed online starting from October 15, 2024 and will end on October 17, 2024. I anticipate that the Anticipated Allotment for Hyundai Motor IPO will be endorsed on Friday October the 18 th 2024. Hyundai Motor IPO will be on BSE; also on NSE and the tentative listing date is Tuesday, the 22nd day of October 2024.
The issuing price range of Hyundai Motors IPO shares is ₹1865 to ₹1960. A minimum lot size for an application is Seven Shares, according to the provisions of the articles of incorporation. The suggested investment amount has been set to be minimum for the retail investors which sums up to ₹13,720. For sNII it is 15 lots (105 shares) = ₹205800, for bNII it is 73 lots (511 shares) = ₹1001560.
The issue also comprises an option for employees to take up to 778,400 shares at Rs 186 less than the issue price.
The Hyundai Motors IPO is sharing book running lead managers Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, Hsbc Securities & Capital Markets Pvt Ltd, J.P. Morgan India Private Limited and Morgan Stanley India Company Pvt Ltd while the registrar for the issue is Kfin Technologies Limited.
IPO Date | October 15, 2024 to October 17, 2024 |
Listing Date | October 22, 2024 |
Face Value | ₹10 per share |
Price Band | ₹1865 to ₹1960 per share |
Lot Size (Retail.) | 7 Shares (Min.) |
Total Issue Size | 142,194,700 shares (aggregating up to ₹27,870.16 Cr) |
Offer for Sale | 142,194,700 shares of ₹10 (aggregating up to ₹27,870.16 Cr) |
Employee Discount | Rs 186 per share |
Issue Type | Book Built Issue IPO |
Listing At | BSE, NSE |
Share holding pre issue | 812,541,100 |
Share holding post issue | 812,541,100 |
An IPO also known as an Initial Public Offering is the public sale of equity stakes in a company that were previously held by the company’s shareholders. This lead way to change of ownership from private to public since a company with public offer its stocks to institutional investors and the public in order to raise capital funds.
Hyundai India GMP : Hyundai Motor IPO last GMP is ₹175, last updated Oct 10th 2024 02:24 PM. With the price band of 1960.00, Hyundai Motor IPO’s estimated listing price is ₹2135 (cap price + today’s GMP).The expected percentage gain/loss per share is 8.93%.
Hyundai Motor India IPO Timeline
IPO Open Date | Tuesday, October 15, 2024 |
IPO Close Date | Thursday, October 17, 2024 |
Basis of Allotment | Friday, October 18, 2024 |
Initiation of Refunds | Monday, October 21, 2024 |
Credit of Shares to Demat | Monday, October 21, 2024 |
Listing Date | Tuesday, October 22, 2024 |
Cut-off time for UPI mandate confirmation | 5 PM on October 17, 2024 |
Challenges and Risks
Despite some attractive features of investing in Hyundai India through the IPO it is necessary to look at the risks and difficulties that the company may face post IPO.
- Market Competition
Currently the automobile industry in India is highly competitive as there are various players in the market be it the domestic players as well as international players. Market leaders in the passenger vehicle segment remain Maruti Suzuki, while Tata Motors and Mahindra are acquiring a higher share, especially in electric vehicles. Hyundai India must learn how it can sustain its competitive advantage and keep on bringing many new products that will have relevance to Indians.
- Regulatory Environment
Current government regulations and policies affecting the Indian automotive industry are emissions norms, safety standards, and electric vehicle policies. However, the government initiative of EV presents its own challenge like the charge infrastructure build up and about meeting the new standards as they evolve.
- Macroeconomic Factors
IPO success also depends on micro factors such as inflation rates, interest rate and the general market sentiment that shape the consumption pattern of the people in India. Market conditions may stagnate, or worse, fluctuate which affects the consumption rate of automobiles by individuals, thus affecting Hyundai’s financials.
Key factors that potential investors should consider:
- Financial Performance
It is important for the investors to study Hyundai India balance sheet and profit and loss account where factors such as revenue, profits and operating cash flows will be made known. The past financial performance of a company indicates that the firm will deliver long-term returns after it goes public.
- Growth Potential
The company’s future growth in India will depend on its capacity to add new products to its portfolio, introduce new technologies, find applications for new products, more specifically electrical vehicles as well as SMMs. Specifically, investors should consider the basic course of action as well as the ability to gain market share in the shifting dynamics of the automobile industry.
- Valuation
The success of the IPO will also therefore depend with the offer price was Hyundai India assigns to the shares it wishes to issue. If an investor would like to analyse whether such an IPO offering is attractive, he or she should benchmark the provided valuation multiples with similar companies from the automotive industry.
Conclusion
The new Hyundai India IPO is one of the biggest steps for this company and for the whole automobile industry in India. The IPO is going to be a great opportunity for the investors to invest in the shares of one of the biggest automobile industries of India, as well as in the growing car business in this country.
Despite this growth outlook, the IPO means the investors need to carry out their research and reappraisal of the opportunity at the risk and the business model among portions. If managed properly, Hyundai Motor India IPO presents the key to future profitability – and a new avenue for the advancement of automotive manufacturing in India.
FAQ'S
What is IPO ?
An IPO also known as an Initial Public Offering is the public sale of equity stakes in a company that were previously held by the company’s shareholders. This led to a change of ownership from private to public since a company with public offer its stocks to institutional investors and the public in order to raise capital funds.
What is Hyundai India GMP ?
Hyundai Motor IPO last GMP is ₹175, last updated Oct 10th 2024 02:24 PM.
What is Hyundai Motor India IPO lot size ?
| Application | Lots | Shares | Amount |
| Retail (Min) | 1 | 7 | ₹13,720 |
| Retail (Max) | 14 | 98 | ₹192,080 |
| S-HNI (Min) | 15 | 105 | ₹205,800 |
| S-HNI (Max) | 72 | 504 | ₹987,840 |
| B-HNI (Min) | 73 | 511 | ₹1,001,560 |
Has Hyundai Motor Company ever had an IPO ?
Yes, Hyundai Motor Company is publicly listed on the Korea Exchange (KRX). Its stock is available for trading under the ticker symbol 005380.KS. However, Hyundai Motor India, a subsidiary, has not issued an IPO.
