Hyundai Motor India IPO Opens October 15: Latest GMP, Price Band, and Expert Views Revealed

Hyundai Motor India is set to launch its Initial Public Offering (IPO) on Tuesday, October 15, and it will remain open until Thursday, October 17. The company will announce the allocation of shares to anchor investors on Monday, October 14. The price range for Hyundai Motor India IPO shares has been set between ₹1,865 and ₹1,960 per share, with each share having a face value of ₹10.

Hyundai Motor India was founded in May 1996 and is part of the Hyundai Motor Group, the world’s third-largest car manufacturer by sales of passenger vehicles. The company makes and sells reliable, feature-rich four-wheel passenger vehicles like sedans, hatchbacks, SUVs, and electric vehicles (EVs). It also produces engines and transmissions. Their manufacturing plant near Chennai produces all of their vehicle models.

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Some popular Hyundai cars in India include the Grand i10 NIOS, i20, i20 N Line, AURA, Elantra, Venue, Verna, Creta, Alcazar, Tucson, and the all-electric Ioniq 5 SUV. Hyundai Motor India also exports its vehicles to Africa, the Middle East, Bangladesh, Nepal, Bhutan, and Sri Lanka. As of March 31, 2024, the company has sold nearly 12 million vehicles in India and abroad.

Grey Market Update:

The Hyundai Motor India IPO grey market premium (GMP) is currently ₹165. This suggests that the company’s shares are expected to list at around ₹2,125 per share, which is 8.42% higher than the top end of the IPO price band at ₹1,960. However, the GMP has shown a downward trend, having dropped from a high of ₹570 to its current level of ₹165.

IPO Details:

Hyundai Motor India’s parent company will offer 14.2 crore shares through an Offer for Sale (OFS), with no new shares being issued. The IPO is managed by Kotak Mahindra Capital, Citigroup Global Markets, HSBC Securities, JP Morgan India, and Morgan Stanley. KFin Technologies is the registrar for the IPO.

Valuation Concerns:

Aequitas Investments has pointed out potential issues with the Hyundai Motor India IPO. While the offering has drawn attention, the firm is cautious due to valuation concerns and challenges facing the global and Indian automotive sectors. The report highlights that while Hyundai’s India unit only contributes 6.5% to global revenues and 8% to profitability, it could be valued at around 42% of the parent company’s market capitalization after the IPO. Aequitas also noted that Hyundai’s stock in South Korea trades at a much lower P/E ratio of 5x compared to the expected valuation in India.

Brokerage Views:

Nuvama Institutional Equities has estimated that Hyundai Motor India’s profit for FY27 could reach ₹68 billion, based on a projected 5% annual growth in profits. At the upper end of the IPO price, this would imply a P/E ratio of 24x. Nuvama expects single-digit earnings growth due to factors like increased royalty payments and reduced other income after a large dividend payout of ₹108 billion in January 2024.