Hyundai IPO Now Open for Subscription: Key Price Band, GMP, and Details

Hyundai Motor India's highly anticipated initial public offering (IPO) has opened for subscription today, October 15, and will run until October 17. This IPO is a landmark event, making Hyundai the first automaker to go public in India since Maruti Suzuki's listing in 2003.

Price Band and Issue Size

The price band for the Hyundai IPO has been set between ₹1,865 and ₹1,960 per share. Through this public offering, Hyundai aims to raise ₹27,856 crore, which includes an offer-for-sale of 14.2 crore shares, representing a 17.5% stake in the company. This significant capital raise is intended to fund various growth initiatives and strengthen Hyundai's position in the competitive automotive market.

Latest Grey Market Premium (GMP)

As of today, the grey market premium (GMP) for Hyundai's stock is at ₹40, reflecting a modest 2.04% premium over the issue price. This is a significant drop from the ₹570 GMP seen just two weeks ago. While the grey market sentiment is often seen as an early indicator of listing performance, it is important to note that GMP can be volatile and should not be the sole factor driving investment decisions. Investors are advised to consider the broader market conditions and Hyundai's fundamentals when evaluating this IPO.

Subscription Timeline

The Hyundai IPO is open for subscription starting today and will close on October 17. Retail investors, qualified institutional buyers (QIBs), and non-institutional investors (NIIs) can all participate in the IPO. Given Hyundai's strong market presence and financial performance, the IPO is expected to attract significant investor interest. This is an excellent opportunity for various investor segments to take part in one of the most promising automotive companies in India.

Hyundai's Market Position

Hyundai is a dominant force in India's automotive sector, boasting a 14.6% market share. The company's manufacturing facilities in Chennai have a combined production capacity of 8.24 lakh units and are currently operating at over 90% capacity. Hyundai's product lineup includes 13 models, with SUVs like the Creta and Venue playing a pivotal role in its success. These popular models have contributed significantly to Hyundai's growth and have helped solidify its reputation as a reliable automaker in the Indian market.

In the first quarter of FY24, Hyundai posted revenue of ₹17,344 crore and a net profit of ₹1,489.65 crore, reflecting solid growth from the previous year. The company plans to utilize the IPO proceeds to expand its business, improve its electric vehicle (EV) offerings, and fund other strategic initiatives aimed at enhancing its market competitiveness.

Should You Subscribe?

Several brokerage firms have provided positive recommendations for Hyundai's IPO, citing the company's solid market position, robust financials, and growth potential. ICICI Direct, Bajaj Broking, and SBI Securities have all advised investors to subscribe, especially those with a long-term investment horizon. Hyundai's valuation, pegged at 26.3 times its FY24 earnings at the upper end of the price band, is seen as competitive when compared to rivals like Maruti Suzuki, which trades at 29 times FY24 earnings.

LKP Securities and Anand Rathi have echoed these sentiments, highlighting Hyundai's strong standing in the Indian automotive landscape, particularly in the SUV segment. They recommend subscribing to the IPO with a focus on long-term gains, given the company's potential to maintain its leadership position and grow its electric vehicle portfolio.

Master Capital Services Ltd also noted that Hyundai's growth trajectory aligns well with the projected 4.5-6.5% CAGR for the domestic passenger vehicle (PV) industry. They suggest that investors consider subscribing, especially those looking for a long-term play in the auto sector. This aligns with Hyundai's strategic vision to tap into the growing demand for passenger vehicles in India.

Saji John, Senior Research Analyst at Geojit Financial Services, emphasized that Hyundai's premium product lineup, especially in the SUV and EV segments, positions the company to make a significant impact in the industry. Hyundai's innovative approach in the electric vehicle space could further solidify its market leadership as consumer demand shifts toward more sustainable and advanced options. With the global automotive industry increasingly focusing on electric mobility, Hyundai's efforts in this direction could enhance its competitive edge.

Moreover, with Hyundai being the first major automaker in two decades to launch an IPO in India, there is also expected to be significant foreign investor interest. This could enhance the valuation of not just Hyundai but the entire automotive sector, creating a positive ripple effect for other companies as well.

How to Invest

Investors can apply for the Hyundai IPO via their Demat accounts using net banking or stockbroker platforms. The minimum lot size is [Number of Shares] shares, and investors can place bids in multiples thereof. This accessibility ensures that a wide range of investors can participate in the IPO, which is critical for the overall success of the offering.

In a Nutshell

Hyundai Motor India's IPO presents a compelling opportunity for investors looking to gain exposure to a key player in India's rapidly evolving automotive market. While the IPO may not promise immediate short-term gains, Hyundai's long-term growth potential, particularly in the electric vehicle space, makes it an attractive option for long-term investors. Given the strong recommendations from various brokerage firms and the company's established market position, many investors may find this IPO to be a valuable addition to their portfolios.