Hyundai Motor India Ltd. (HMIL) is expected to file draft papers for its initial public offering (IPO) with the Securities and Exchange Board of India (Sebi) by Friday evening. This move could lead to one of the largest share sales in the country, according to a banker familiar with the plan.
IPO Valuation and Timing
In April, reports indicated that Hyundai’s Indian arm planned to file a draft red herring prospectus for a $3-3.5 billion IPO in June, aiming to list its shares before Diwali. However, initial feedback from bankers suggests the IPO might be valued between $2.5 billion and $3 billion. The draft prospectus will provide potential investors with details about the company’s growth plans, including product development and market expansion.
The biggest IPO in India to date was by Life Insurance Corporation of India, raising ₹20,557 crore ($2.46 billion) in May 2022.
A spokesperson for Hyundai declined to comment on the matter.
HMIL, the second-largest carmaker in India after Maruti Suzuki, recently invited analysts to its Chennai manufacturing facility to kick-start the IPO process.
Market Competition
As Tata Motors aims to increase its market share to 20% of all passenger vehicle sales by 2030, investors and analysts will be keen to see how HMIL, which gets over 60% of its sales from SUVs, is positioned in the competitive market.
Listing its Indian subsidiary is a significant step for Hyundai as it competes with other major automakers. The IPO in one of the world’s fastest-growing automotive markets will also help the company boost its market value as part of South Korea’s ‘corporate value-up’ programme. This initiative encourages companies to seek foreign listings to increase their valuations and return more money to shareholders.
Industry Insight
“Listing in India shows the potential for value-realization from the world’s third-largest passenger vehicle market, which hasn’t been fully reflected in Hyundai’s overall market value,” said an industry executive who wished to remain anonymous. “The India listing could lead to a reevaluation of the company’s remaining operations and India’s importance to the business, potentially increasing Hyundai’s overall market capitalization.”
Although Hyundai has substantial cash reserves at the parent level, the India IPO aims to generate additional capital for enhancing shareholder returns through dividends and share buybacks.
Hyundai’s India listing highlights its commitment to expanding operations in the country, including setting up a battery assembly factory and increasing production capacity through the acquisition of General Motors’ factory in Talegaon, Pune. It also sets an example for other Korean companies looking to expand their investor base and improve valuations through international listings.
Market Potential
Passenger vehicle makers in India attract high valuations due to strong domestic demand, especially for premium models. Listed Indian auto companies include Maruti Suzuki India (market capitalization over ₹4 trillion), Tata Motors ( ₹3.3 trillion), and Mahindra & Mahindra ( ₹3.6 trillion).
Hyundai Motor India has capitalized on this consumer preference with SUVs like Creta, Venue, and Exter, which accounted for about 60% of its total domestic sales in FY24.
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