Hyundai Motor IPO opens tomorrow: Check latest GMP, brokerage reviews and more

Hyundai Motor India IPO: Priced between Rs 1,865 and Rs 1,960 per share, the IPO is expected to raise Rs 27,856 crore through an offer for sale of 14.2 crore shares, representing a 17.5% stake.

In Short

• Hyundai Motor India's Rs 27,856 crore IPO opens on October 15
• IPO priced between Rs 1,865 and Rs 1,960 per share
• Grey market premium reflects modest Rs 33 ahead of opening

Hyundai Motor India’s highly anticipated initial public offering (IPO) opens for subscription tomorrow, October 15, and will run until October 17. This marks a significant milestone, making Hyundai the first automaker to go public in India since Maruti Suzuki’s listing in 2003.

Priced between Rs 1,865 and Rs 1,960 per share, the IPO is expected to raise Rs 27,856 crore through an offer for sale of 14.2 crore shares, representing a 17.5% stake.

GMP DECLINES AHEAD OF IPO OPENING

Hyundai Motor India’s stock is trading at a grey market premium (GMP) of Rs 33, reflecting a modest 1.68% premium over the issue price, which is lower than the Rs 570 premium seen two weeks ago.

However, grey market premiums are volatile and should be considered as mere indicators rather than decisive factors for investment.

HYUNDAI MOTORS IPO KEY DETAILS

Hyundai is a dominant player in India’s auto industry, with a market share of 14.6%. The company’s manufacturing facilities in Chennai have a combined production capacity of 8.24 lakh units, currently running at over 90% capacity.

In the first quarter of FY24, Hyundai recorded revenue of Rs 17,344 crore, with a net profit of Rs 1,489.65 crore, showing growth from the previous year. The automaker’s product lineup spans 13 models, with SUVs contributing significantly to its success.

SHOULD YOU SUBSCRIBE?

Brokerage firms are largely optimistic about Hyundai Motor India’s upcoming IPO, offering favourable recommendations for potential investors. ICICI Direct, Bajaj Broking, and SBI Securities have all suggested subscribing to the IPO, citing Hyundai's strong market position, robust financial performance, and promising growth prospects. While they expect limited short-term gains, they emphasise the potential for substantial long-term returns.

Hyundai's valuation, pegged at 26.3 times its FY24 earnings at the upper end of the price band, compares favourably to competitors like Maruti Suzuki, which trades at 29 times FY24 earnings. This favourable valuation positions Hyundai as an attractive option for long-term investors.

LKP Securities echoed this positive sentiment, assigning a “Subscribe” rating in their IPO note. They highlighted that Hyundai trades at a multiple of 26 times FY24 earnings, underscoring its competitive valuation compared to peers.

Anand Rathi also weighed in, noting that Hyundai has consistently maintained its status as a leading auto original equipment manufacturer (OEM) in India, particularly in the mid-size SUV segment. They recommend a “Subscribe – Long Term” rating for the IPO, indicating confidence in Hyundai’s sustained market leadership.

Adding to this, Master Capital Service Ltd emphasised that the domestic passenger vehicle (PV) industry is projected to grow at a compound annual growth rate (CAGR) of 4.5-6.5%, aligned with India's GDP growth. Hyundai has been the second-largest contributor to these volumes since Fiscal 2009, largely due to the continued popularity of its SUV models, such as the Creta and Venue.

The brokerage noted that the company plans to enhance its position by expanding its passenger vehicle portfolio, leveraging deep consumer insights, and increasing its electric vehicle (EV) market share. Furthermore, it aims to premiumise its offerings while focusing on calibrated capacity expansion and efficient capital allocation. Master Capital views the IPO as fully priced and suggests that long-term investors consider participation.

Saji John, a Senior Research Analyst at Geojit Financial Services, pointed out that Hyundai's impressive financial performance and premium product mix, especially in the SUV segment, could significantly alter the competitive landscape in the automotive sector. This might prompt other automakers to innovate and enhance their offerings to regain investor confidence.

Hyundai's focus on innovation, particularly in the electric vehicle (EV) sector, strategically positions it to capture a larger market share and command premium prices. As consumer preferences increasingly shift toward EVs, Hyundai’s advanced and competitive models are likely to attract more buyers. The company's strong brand image and loyal customer base, particularly in the SUV and premium car segments, further bolster its market position, potentially impacting rivals like Maruti Suzuki.

Additionally, being the first major auto IPO in India in over two decades, Hyundai's offering could draw significant global investor interest. This influx of foreign investment may enhance the sector’s overall valuation. However, if the IPO is perceived as overvalued, it could negatively affect market sentiment.

For investors looking to gain exposure to a key player in India's rapidly evolving auto industry, Hyundai Motor India's IPO presents a compelling opportunity with strong long-term growth potential.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)