Hyundai Motor India Ltd, the Indian arm of South Korean automaker Hyundai, is likely to launch its much-awaited Rs 25,000-crore initial share-sale for public subscription on October 14, news agency PTI has reported citing people familiar with the development.
This IPO marks a significant milestone for the Indian auto industry, as it is the first automaker’s initial share sale in over two decades, following Japanese automaker Maruti Suzuki’s listing in 2003.
Hyundai Motor India IPO: What Analysts Say
Brokerage firm Master Capital Services Ltd in its note said, “Hyundai Motor is the second largest carmaker in India after Maruti Suzuki India. In comparison to Maruti Suzuki, Tata Motors, and other competitors, Hyundai Motor India is thought to be stronger as a result of the listing since it may make financing in the future simpler even though the company is not going to utilize the IPO proceeds directly for the company. The business’s stated RoNW for FY23 was 23.48%, the highest among its peers. This indicates that the company is making good use of the money provided by shareholders to create profits.”
From Fiscal 2019 to 2023, the PV industry saw strong growth, with a healthy 11% CAGR in industry value driven by an 8% CAGR in average vehicle prices and a 3% CAGR in total sales volumes and Hyundai is well positioned to take advantage of this growth due to their diverse offerings within the industry as compared to its peers which exhibit varied financial metrics, highlighting diverse market strengths, it added.
“Hyundai’s IPO offers potential value growth by expanding investment prospects in the underdeveloped Indian auto market,” Master Capital Services stated.
Hyundai Motor India IPO Size
This would be the largest initial public offering (IPO) in India after LIC’s initial share sale of Rs 21,000 crore.
Hyundai Motor India’s proposed Rs 25,000-crore IPO is entirely an offer-for-sale (OFS) of 142,194,700 equity shares of the face value of Rs 10 each by promoter Hyundai Motor Company, with no fresh issue component, according to the draft red herring prospectus (DRHP) filed in June.
In February this year, reports suggested that Hyundai was looking to raise at least $3 billion through an IPO. It might dilute a 15-20 per cent stake to raise funds in the range of $3.3-5.6 billion.
Hyundai Motor India IPO: Opening Date & Price
According to a PTI report, this record-breaking IPO is likely to be launched on October 14. However, the official date will be announced by Hyundai Motor India later.
The price band of the IPO will also be announced later.
Hyundai Motor India IPO: A Complete Offer for Sale
The Hyundai Motor India IPO is completely an offer for sale (OFS). It means the existing promoters are offloading their equity in the market, and no fresh equity will be floated.
The South Korean parent is diluting some of the stake through the OFS route. Since the public issue is completely an OFS, Hyundai Motor India Ltd, which is the second largest carmaker in India after Maruti Suzuki India, will not receive any proceeds from the IPO.
The automaker received approval from the Securities and Exchange Board of India (Sebi) on September 24 to float its IPO.
In its draft papers, Hyundai Motor India stated that it expects that the listing of the equity shares “will enhance our visibility and brand image and provide liquidity and a public market for the shares”.
Hyundai Motor India IPO: More Details
Hyundai Motor India commenced operations in India in 1996 and currently sells 13 models across segments.
In its draft papers, Hyundai Motor India said, “Further, our Company expects that listing of the Equity Shares will enhance our visibility and brand image and provide liquidity and a public market for the Equity Shares in India.”
Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital and Morgan Stanley are the investment banks advising on the transaction and law firm Shardul Amarchand Mangaldas is the company counsel. Cyril Amarchand Mangaldas is the banks’ counsel and Latham and Watkins is acting as the international counsel.
