Hyundai Motor India Ltd. is gearing up for one of the largest share sales in India, which could significantly enhance the valuations of the country’s already thriving automakers.
According to Bloomberg News, the listing is expected to value Hyundai’s Indian unit at $25 billion. This would position it as the fourth largest automaker in India by market capitalisation, a development analysts believe will positively impact the entire sector.
Analyst Insights
Deven Choksey, managing director at DRChoksey FinServ Pvt., stated, “Hyundai’s share sale will increase the sector’s valuation, highlighting its attractiveness as a hub for global sourcing from India.”
The IPO’s valuation, based on the company’s latest annual profit, suggests an earnings multiple of about 25 times. This aligns closely with Maruti Suzuki India Ltd.’s forward estimated earnings. Tata Motors Ltd., which owns Jaguar Land Rover, trades at approximately 15 times earnings, indicating potential for further growth.
Market Performance
Indian automotive stocks have already seen a substantial increase in market value this year, rising nearly 40%, significantly outpacing the broader equity market. This surge is driven by robust demand for new vehicles in India, the world’s fastest-growing major economy.
Choksey further remarked, “The presence of another global player in the Indian market will attract higher investments and larger funds to the auto sector.”
Hyundai’s focus on electric vehicles (EVs) has also contributed to optimism about the industry’s future sales. The company’s IPO filing indicates that EVs could account for up to 20% of India’s market by 2029, a nine-fold increase from current levels. Mahindra & Mahindra and Tata Motors, established players in the sector, are similarly prioritising EV development.
Consumer Demand Dynamics
Abhishek Banerjee, founder and CEO of Lotusdew Wealth and Investment Advisors, highlighted that consumer demand for lifestyle upgrades will sustain interest in electric and hybrid vehicles, supporting continued growth in automaker stocks.
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