Hyundai India IPO a Key Step for Growth: COO Tarun Garg Highlights Electric Vehicles, CNG Expansion, and Pune Plant

Tarun Garg, COO, and Unsoo Kim, MD of Hyundai Motor India, spoke to ET Now as the company prepares for its IPO on October 15. According to Garg, the IPO is a significant step in Hyundai’s journey toward expanding its presence in India.

Why is Hyundai launching an IPO now?

Tarun Garg explained that this is the right time for the IPO because India’s economy is growing steadily, with a GDP growth rate of 6.5% to 7%. He also highlighted Hyundai’s ongoing expansion, particularly the addition of a new plant in Pune, which will increase capacity. Hyundai believes this IPO will be a key stepping stone to its next phase of growth in India.

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Competing with Maruti Suzuki

When asked about Hyundai’s strategy to compete with Maruti Suzuki, Garg pointed out that Hyundai has been growing consistently by launching innovative products. He mentioned the success of models like the Creta, Venue, Exter, and IONIQ 5. Hyundai’s focus on premium features and quality of growth will help them compete effectively. Currently, SUVs make up 68% of Hyundai’s sales, much higher than the industry average. Garg emphasised that the company is focused on sustainable growth in both volume and profitability.

Hyundai’s Electric Vehicle (EV) Plans

Unsoo Kim, MD, noted that while India is still in the early stages of adopting electric vehicles, the country’s EV market is expected to grow significantly by 2030. Hyundai is planning to launch four EV models across different segments, including the Creta EV, by the end of this financial year. The company is also working on localising its EV supply chain, including battery packs and other key components. Hyundai is also investing in EV infrastructure to support this growth.

New Model Launches

Garg mentioned that Hyundai has always been ahead of the curve when it comes to launching new models. This year, the company introduced a facelifted version of the Creta and launched the Alcazar, both of which have been well received. Hyundai will continue to explore market opportunities and introduce new models and features, such as advanced infotainment systems and software-defined vehicles.

Long-term Goals for Shareholder Value

Garg stressed that Hyundai is committed to creating long-term value for shareholders by focusing on quality growth. With the additional capacity from the Pune plant, Hyundai will have more room for expansion in both the domestic and export markets. The company’s strong culture of cost optimisation will help reduce expenses, while its premiumisation strategy will continue to add more advanced features to its vehicles. Hyundai also benefits from its parent company, HMC, which provides strong research and development support.

Commitment to “Make in India”

Hyundai has been committed to the “Make in India” initiative since it first started operations in the country. Exports have always been a key part of Hyundai’s strategy, with an 80-20 split between domestic sales and exports. Garg believes the new Pune plant will help the company grow sustainably, both in India and in international markets.

Financial Outlook

For the financial year 2024, Hyundai expects revenues to be around ₹70,000 crore with an EBITDA margin of over 13%, one of the best in the industry. The company’s strong SUV portfolio, high premiumisation, efficient cost structure, and high plant utilisation are the key drivers behind these numbers. Hyundai aims to maintain healthy profit margins in the coming years.

Festive Season Boost

Garg also spoke optimistically about the upcoming festive season, which includes key events like Navratras, Dussehra, and Dhanteras. Hyundai expects a strong boost in sales during this period, not just for itself but for the entire auto industry. The company is already seeing positive sales trends in the first week of October.

India’s Role in Global Automotive Manufacturing

Unsoo Kim highlighted that Hyundai Motor Group (HMG) is the third-largest automaker in the world, with a strong presence in over 190 countries. Hyundai Motor India (HMI) plays a crucial role as a production hub for emerging markets like the Middle East, Africa, South Asia, and Latin America. Hyundai exports to over 80 countries, contributing not only to profits but also providing a natural hedge against market fluctuations.

Changing Fuel Preferences and CNG Sales

Tarun Garg mentioned that Hyundai offers a wide range of powertrain options, including petrol, diesel, CNG, and electric vehicles, to cater to diverse customer needs across India. CNG sales have seen a significant rise, contributing more than 12-13% of total sales. Hyundai’s flexibility in offering different fuel types helps the company target various regions effectively, where preferences for certain fuels vary.

Overall, Hyundai is well-positioned for future growth with its diverse product offerings, focus on innovation, and commitment to the Indian market. The upcoming IPO is expected to be a key driver for the company’s next phase of expansion.