Hyundai Motor India Ltd. (HMIL), India’s second-largest car maker, is preparing for a massive IPO worth ₹25,000 crore, set to be the biggest in India’s history. This IPO, planned for the next four to six months, will involve the South Korean parent company selling up to 17.5% of its stake.
Aiming for Greater Visibility and Value
As Indian stock markets soar, Hyundai believes that listing its shares in India will boost its visibility, brand image, and provide liquidity for its shares. Hyundai, which entered India 28 years ago, has built a strong reputation with popular models like the Santro and Creta. The company plans to use the IPO to support new electric vehicle launches, charging stations, and a battery assembly unit.
Overcoming the “Korea Discount”
Hyundai’s IPO aims to unlock value for its Indian business and address the “Korea discount,” where South Korean companies often have lower valuations due to governance issues and other factors. Hyundai is looking at a valuation of up to $30 billion for the India unit, which is more than half of its Korea-listed parent company, valued at $48 billion.
The Role of Chaebols
Hyundai is part of a chaebol, a family-controlled conglomerate that played a key role in South Korea’s economic growth. Despite their success, chaebols often face lower valuations due to issues like governance challenges. Hyundai’s move to list in India is seen as a way to potentially achieve better valuations by focusing on local performance.
India’s Booming Stock Market
Hyundai’s IPO plans come as India’s stock markets are experiencing a surge. India’s stock market has recently become the world’s fourth-largest, with a total value of $4.33 trillion. The growing interest in large IPOs and strong investor sentiment make it an attractive time for Hyundai to list its shares.
Use of IPO Funds
Hyundai plans to use the proceeds from the IPO to fund the launch of electric vehicles in India, set up a charging network, and expand manufacturing capacity. The company sees India as a crucial growth market and aims to make it a key export hub to expand its global business.
Strengthening Hyundai’s Position
The listing is expected to strengthen Hyundai’s position against competitors like Maruti Suzuki and Tata Motors. It will make future fundraising easier without relying on its Korean parent company. The proceeds will support Hyundai’s strategy to introduce several electric vehicles over the next four years and enhance its manufacturing capabilities in India.
By entering the Indian stock market, Hyundai aims to capitalize on the country’s strong economic growth and investor interest, paving the way for a significant expansion of its operations and market presence.
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