Hyundai Motor India's IPO Launches Tomorrow: Key Details to Know About GMP, Allotment, Price Band, and More

Hyundai Motor India's initial public offering (IPO) is generating significant buzz as it prepares to open for subscription. With a price band set between Rs 1,865 and Rs 1,960 per share, the company aims to raise an impressive Rs 27,870 crore. This offering stands out as one of the largest in recent history, showcasing strong demand evidenced by a grey market premium of Rs 60 per share.

IPO Launch Details

The highly anticipated IPO will commence on October 15, 2024, and remain open for subscription until October 17, 2024. Investors can look forward to the allocation for anchor investors, which is scheduled for October 14. Following the closure of the subscription, the allotment basis is expected to be finalized on October 18, with refunds being initiated on October 21. Successful applicants will see shares credited to their demat accounts on the same day, leading to the anticipated stock market debut on October 22, 2024.

Pricing Structure of the IPO

Hyundai Motor India Limited has established its price band at Rs 1,865 to Rs 1,960 per equity share, each with a face value of Rs 10. The upper limit represents a multiple of 196 times the face value, while the lower limit stands at 186.5 times the face value. This pricing offers a competitive range for investors as the company gears up for its public launch.

Current Grey Market Premium (GMP)

As of now, the IPO is trading at a grey market premium (GMP) of Rs 60, indicating that shares are expected to debut at a premium in unofficial markets. Based on the upper price of Rs 1,960 and the current GMP, analysts project an estimated listing price of Rs 2,020 per share, reflecting a potential gain of 3.06% upon listing.

Reservation of Shares for Investor Categories

The IPO includes specific allocations for different investor categories: 50% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors. This structured allocation aims to ensure a balanced participation across various segments.

Key Financial Institutions Involved

Hyundai Motor India's IPO is being orchestrated by a consortium of prominent merchant bankers, including Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities and Capital Markets (India), JP Morgan India, and Morgan Stanley India. KFin Technologies has been appointed as the registrar for the IPO, overseeing the application process and allotment.

Risks Associated with the IPO

Investors should be mindful of certain risks related to Hyundai Motor India’s operations. The company relies heavily on a limited number of suppliers for key components, meaning that any fluctuations in prices for these materials could adversely affect business performance. Additionally, potential disruptions in the supply chain may impact production and operational efficiency. The company also depends significantly on its parent, Hyundai Motor Company, for vital operational support and resources.

Sales Performance and Market Position

Hyundai Motor India’s sales performance has shown some fluctuations, reporting 64,201 units sold in September 2024, which represents a 10% decline year-on-year. Year-to-date figures indicate a total of 577,000 units sold, reflecting no major change compared to the previous year. Despite these challenges, Hyundai maintains its position as the second-largest original equipment manufacturer (OEM) and exporter of passenger vehicles in India, holding a 14.6% share of the domestic market.

Comparative Analysis with Peers

The IPO Red Herring Prospectus (RHP) highlights Hyundai Motor India’s competitive landscape, comparing its price-to-earnings (P/E) ratio with notable peers. As of October 4, 2024, Maruti Suzuki India has a P/E of 17.93, Tata Motors stands at 11.36, and Mahindra & Mahindra (M&M) boasts a P/E of 29.96. This comparative analysis can provide insights into market positioning and investor expectations.

Objectives of the IPO

The proceeds from the IPO will primarily benefit the promoter, as they retain all earnings after deducting associated costs and taxes. Importantly, Hyundai Motor India itself will not receive any financial benefit from this public offering.

Significance of Hyundai Motor India’s IPO

Hyundai’s upcoming IPO marks a historic moment in the Indian automotive sector, being the first public offering by an Indian carmaker in over two decades since Maruti Suzuki’s debut in 2003. The timing coincides with Indian stock markets reaching record highs, reflecting a robust trend of new companies entering the public arena and generating interest among investors.