Hyundai Motor India, the second-largest carmaker in the country, is planning to launch its initial public offering (IPO) in November, which could be the largest ever in India, surpassing the previous record set by LIC in 2022. The IPO is expected to value the company at $22-28 billion, and raise $3.3-5.6 billion for the parent company, Hyundai Motor Co, based in South Korea.
Hyundai Motor India: A Success Story in the Indian Market
Hyundai Motor India, which started its operations in 1996, has become one of the most successful and popular car brands in India, with a market share of 17.4% as of January 2024. The company has sold over 10 million vehicles in India, and has a network of over 1,300 dealers and service centers across the country. The company has also invested over $4 billion in India, and has created over 15,000 direct and 150,000 indirect jobs.
The company offers a wide range of products, from hatchbacks to SUVs, catering to the diverse needs and preferences of the Indian consumers. Some of the best-selling models of the company are Creta, Venue, i20, Grand i10, and Santro. The company has also introduced electric and hybrid vehicles, such as Kona and Ioniq, to tap into the growing demand for eco-friendly mobility solutions.
The company has also established a strong manufacturing base in India, with two plants in Chennai, Tamil Nadu, with a combined annual capacity of 7.5 lakh units. The company exports its vehicles to over 90 countries, including Africa, Middle East, Latin America, and Australia. The company is also planning to set up a new plant in Gujarat, with an investment of $1.3 billion, to increase its production capacity and meet the domestic and overseas demand.
Hyundai Motor India: The Rationale and Benefits of the IPO
Hyundai Motor India is considering the IPO as part of its strategy to unlock the value of its Indian subsidiary, and to address the issue of the ‘Korea discount’, which refers to the lower valuation of South Korean companies compared to their global peers. The company hopes that listing in India, which is one of the fastest-growing and largest car markets in the world, will boost its brand image, customer loyalty, and market share.
The IPO will also help the parent company, Hyundai Motor Co, to raise funds for its future investments and expansion plans, especially in the areas of electric vehicles, autonomous driving, and hydrogen fuel cells. The company is facing stiff competition from rivals such as Toyota, Volkswagen, and Tesla, and needs to innovate and diversify its portfolio to stay ahead of the curve.
The IPO will also benefit the Indian investors, who will get an opportunity to participate in the growth story of Hyundai Motor India, and gain exposure to the booming automotive sector. The IPO is expected to attract strong interest from institutional and retail investors, given the track record and reputation of the company, and the positive outlook for the industry.
Hyundai Motor India: The Timeline and Details of the IPO
Hyundai Motor India is aiming to launch its IPO around Diwali, between September and November 2024, after getting the approval from the board of directors and the regulators. The company has already appointed several global banks, such as Goldman Sachs, Citi, Morgan Stanley, JP Morgan, Bank of America, HSBC, Deutsche Bank, and UBS, to manage the IPO process.
The company is likely to dilute 15-20% of its equity, and offer 30-40 crore shares to the public, at a price range of Rs 900-1,200 per share. The company is expected to raise $3.3-5.6 billion (Rs 27,390-46,480 crore) from the IPO, which would value the company at $22-28 billion (Rs 1.82-2.32 lakh crore). This would make it the largest IPO in India, surpassing the previous record of Rs 21,000 crore set by LIC in 2022.
The company is also expected to reserve a portion of the shares for its employees, dealers, and suppliers, as a gesture of gratitude and recognition for their contribution to the company’s success. The company will also offer a discount to the retail investors, to encourage their participation and loyalty.
The company will use the proceeds from the IPO for various purposes, such as repaying debt, funding capital expenditure, investing in research and development, and supporting social and environmental initiatives.
