Hyundai Motor shares made a quiet entry into the stock market on Thursday, October 17. They opened at ₹1,934 on the National Stock Exchange (NSE), which was 1.3% below the IPO price of ₹1,960. On the Bombay Stock Exchange (BSE), the shares listed at ₹1,931, 1.5% lower than the IPO price.
The Hyundai Motor IPO was valued at ₹27,870.16 crore, making it the largest public offering in India. The IPO ran from October 15 to October 17, with shares priced between ₹1,865 and ₹1,960.
The IPO received good demand but not as much as expected. It was subscribed 2.37 times, with 23.63 crore shares bid for against 9.89 crore shares available. However, retail investors and non-institutional investors didn’t fully subscribe. Retail investors bought 0.50 times their share, while non-institutional investors subscribed 0.6 times. Only the qualified institutional buyers (QIB) category saw full subscription at 6.97 times.
About the IPO
Hyundai Motor’s IPO was an offer for sale of 14.22 crore shares with no fresh issue involved. After the IPO, the promoters’ shareholding in the company will drop to 82.5%. On October 14, 2024, the company raised ₹8,315.28 crore from anchor investors. Retail investors had to apply for a minimum lot size of 7 shares, costing ₹13,720.
The company won’t receive any money from the sale of shares, as the funds will go to the selling promoter. After covering the expenses and taxes, the remaining funds will be allocated to the promoter.
The IPO included a reservation of 778,400 shares for employees at a discount of ₹186 per share.
Kotak Mahindra Capital, Citigroup Global Markets, HSBC, J.P. Morgan, and Morgan Stanley were the lead managers for the IPO. Kfin Technologies was the registrar.
Brokerage Opinions
Before the listing, Nomura, a financial firm, recommended buying the stock with a target price of ₹2,472. This price suggests a 26% increase from the IPO price. According to Nomura, Hyundai Motor India is strong in both technology and style. They believe the company’s focus on premium cars will help drive growth. Hyundai is expected to deliver an 8% growth in vehicle sales from FY25 to FY27, with plans for 7-8 new models. Nomura also expects the company’s profit margins to improve to 14% by FY27, up from 13.1% in FY24, thanks to cost-saving measures and better operations.
Overall, Nomura predicts Hyundai Motor India’s earnings will grow by 17% annually from FY25 to FY27.
Another brokerage, Macquarie, also rated Hyundai Motor India with an ‘outperform’ rating and a target price of ₹2,235. This suggests a 14% increase from the IPO price. Macquarie thinks Hyundai Motor India deserves a higher price-to-earnings ratio compared to competitors due to its strong product lineup and premium brand position.
Macquarie believes Hyundai can benefit from its parent company’s technology and powertrain options, along with new model launches. Key factors include growing demand for passenger vehicles in India, Hyundai’s market share, and improving profit margins.
Macquarie expects Hyundai’s earnings to grow steadily, which should lead to higher stock prices compared to other car companies.
About Hyundai Motor India
Hyundai Motor India, part of Hyundai Motor Group, was founded in May 1996. Hyundai is the third-largest car manufacturer in the world by sales. The company is known for producing reliable, feature-packed cars and also makes key components like engines and transmissions.
Hyundai Motor India has a wide network with 1,366 sales points and 1,550 service centers across India. As of March 31, 2024, the company has sold around 12 million cars both domestically and through exports.
Between March 2023 and March 2024, Hyundai Motor India saw its revenue grow by 16%, while its profit after tax (PAT) increased by 29%.
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