Hyundai IPO: Long-Term Buy with 16-18% Growth Expected, Says Analyst

Narendra Solanki, Head of Fundamental Research at Anand Rathi Shares & Stock Brokers, has recommended subscribing to Hyundai’s IPO for long-term investors. He believes that any price drop on the listing day should prompt long-term investors to consider increasing their holdings based on their portfolio needs.

Assessment of the Hyundai IPO:
Solanki sees the IPO as a good opportunity for long-term investment. He notes that the pricing is reflective of the company’s solid business performance. Hyundai is the second-largest car manufacturer in India, with a market share of 14-15%, and is also a leading exporter. The company plans to launch electric vehicle (EV) models starting this year, which positions it well for future growth, especially in the mid-SUV market where it holds a 38% share.

Growth Expectations:
Hyundai is expected to achieve a 16-18% growth rate in both revenue and profit over the next three years. If the company’s EV segment performs well, growth could exceed 18%. Solanki is optimistic that Hyundai’s performance will surpass competitors like Mahindra & Mahindra (M&M) and Maruti Suzuki.

IPO Valuation:
According to Solanki, if the IPO was priced around ₹1,500, it might have attracted more short-term interest. However, he feels that the current pricing is fully valued. He suggests that long-term investors should participate, even if there is less excitement in the short term.

Buying on Dips:
If the IPO opens lower on the listing day, Solanki encourages investors to consider buying more shares, as he has already rated it as a long-term buy.

Potential Triggers for Growth:
The main upcoming event that could boost the stock’s performance is the launch of the Creta EV later this financial year. Solanki believes this could significantly impact the company’s growth.

Concerns About Royalties:
Regarding the increase in royalty payments, Solanki does not see this as a concern. The company has assured that the current royalty rate of 3.5% will remain stable for the foreseeable future, barring any regulatory changes, which he does not expect soon.