Is Hyundai IPO Good or Bad - Detailed Review

The second largest carmaker in India, Hyundai Motors has gotten approval from SEBI for its initial listing offer which will be one of the largest listings in India with an issue size of Rs.25,000 crores. The company has filed its draft red herring prospectus (DRHP) with the regulator in June and with this, we will try to understand if the Hyundai Motor India IPO is Good or Bad and what we can expect from Hyundai Motor IPO. 

In this article, we'll provide a comprehensive Hyundai Motor India IPO review, diving into its business operations and fundamental analysis to help you make a well-informed investment decision.

Hyundai IPO - Company Overview

Hyundai Motor India is a part of Hyundai Motor Group which is the third largest auto original equipment manufacturer (“OEM”) in the world based on passenger vehicle sales in CY23 (Crisil Report). In India, the company has maintained its position as the second-largest auto OEM in the passenger vehicle segment in terms of domestic sales volumes since FY09. 

The company portfolio comprises 13 models that range from various segments, including sedans, hatchbacks, sports utility vehicles (SUVs), and battery electric vehicles (EVs), catering to the diverse preferences of consumers in India. Furthermore, the company also manufactures key components like transmissions and engines, further showcasing its integrated approach to automotive production.

The company conducts its business through its three manufacturing plants of which two operate in Irrungattukottai, Sriperumbudur in Tamil Nadu; and one plant at Talegaon in Pune, Maharashtra, which is under redevelopment. For the purpose of its domestic sales, the company has partnered with 364 dealer companies as of June 30, 2023.

Furthermore, the company exports its passenger vehicles and has been its largest exporter in India from Fiscal 2005 to the first 11 months of FY24 (Crisil Report). Since 1998 and up to FY24, the company has cumulatively sold nearly 12 million passenger vehicles in India and through exports.

Apart from the sale of its vehicles, the company offers high-quality service through its dealer showrooms, Apart from the sale of its vehicles, the company offers high-quality service through its dealer showrooms, service centers, and digital platforms. As of June 30, 2024, customers can browse, test drive, and buy vehicles from 1,377 sales outlets across 1,036 cities and towns in India, or conveniently purchase online through the "Click to Buy" section on Hyundai’s website or the "myHyundai" app. Furthermore, the company provides after-sale services through its 1,561 service centers spread across 957 locations in India.

Hyundai IPO - Financial Overview

The following table shows you the key financial details of Hyundai Motor India for three financial years:

If we take a look at the financials of Hyundai Motor India, we can see that the company has increased its revenue, from Rs.40,972.25 crores in FY21 to Rs.69,829.06 crores in FY24 with the total cars sold increasing from 5,75,877 to 7,77,876 during the same duration. Of the total operating revenue, 77.66% was contributed by domestic sales in FY24.

Similarly, its profits have increased from Rs.1,881.16 crores in FY21 to Rs.6,060.04 crores in FY24 with the final margins increasing from 4.54% to 8.5% during the same duration. The rising margins along with the increasing profits suggest an improvement in the company’s efficiency and reduction in its manufacturing costs.

Over the years, the company has consistently delivered strong returns on capital employed (ROCE). In FY24, this ratio was exceptionally high at 63%. However, it was primarily due to a significant reduction in reserves and surplus on the balance sheet, which was nearly halved compared to the previous financial year because of the special dividend paid by the company.

As of the three months ended FY25, the company reported operating revenue of Rs.17,344.23 crores, up from Rs.16,623.51 crores for the same period in FY24. Additionally, total car sales during this period reached 1,92,055 units, compared to 1,83,403 units in the previous year.

Hyundai IPO - Industry Overview 

The passenger vehicle segment in India has witnessed significant growth in recent years, reaching a vehicle sale of 3.4 million in FY19. This growth was driven by various factors including, an increase in disposable incomes and new model launches, stable cost of vehicle ownership, as well as rising traction for SUVs. 

Between FY19 to FY24, domestic passenger vehicle sales volume in India increased at a CAGR of 5. This growth was achieved despite the sales contraction (at 10% CAGR) witnessed during FY19 to FY21. From the low base of FY21, passenger vehicle sales have bounced back and have grown at a healthy pace to reach 3.9 million vehicles in FY23. In FY24, the industry is expected to have grown by 8.4% to reach the historic high of 4.2 million units.

As per the Crisil report, Hyundai had a market share across select OEMs in India in terms of volume of 12% (hatchbacks), 22% (sedans), and 18% (SUVs) in FY24. 

Hyundai IPO - Peer Comparison

The company faces intense competition in India from both domestic and multinational automobile manufacturers, with Maruti Suzuki, Hyundai, Tata Motors, and Mahindra & Mahindra controlling around 80% of the market. In recent years, competition has increased due to competitively priced and feature-rich vehicle launches by all players, including new entrants. In the export market, competitors include Maruti Suzuki, Volkswagen, Nissan, and Honda. 

The following table gives you a comparison of Hyundai Motor India with its listed industry peers as of FY24:

From the above table, you can see that, despite being the second-largest domestic car manufacturer, Hyundai Motor India stands last in terms of operating revenue. However, the company has reported a RoNW of 56.82% during FY24 which is the highest in comparison to its peers and also indicates that the company is effectively using the shareholders' capital to generate profits. 

While the company has the highest RoNW among its peers, it should also be noted that a significant factor apart from its revenue for the increase in this ratio is the reserve and surplus reducing to almost half because of the special dividends paid by the company.

Lastly, based on the EPS (Rs.74.58) of Hyundai and its upper price band of Rs.1960, the company’s PE ratio would stand at 26.28 which is almost close to its peers Maruti Suzuki, and Mahindra & Mahindra. On the other hand, Tata Motors Limited has a PE of only 11.36 despite giving stellar returns to its investors in the recent year and also has a RoNW of 36.98% making it stand out from its competitors.

Objectives of Hyundai IPO

As the entire IPO of Hyundai Motor India is conducted through an offer for sale, the company will not receive any proceeds from the IPO. The entire proceeds of the IPO will be received by the selling shareholders of the company after deducting the offer-related expenses and relevant taxes thereon.

Hyundai IPO Details

Hyundai IPO Date

Hyundai Motor India is open to subscription from October 15, 2024, to October 17, 2024. The shares will be allocated to investors on October 18, 2024, and the company will be listed in the NSE and BSE on October 22, 2024

Hyundai IPO Issue Price

Hyundai Motor India has priced its IPO shares between Rs. 1,865 and Rs. 1,960. If you bid at the minimum price range, the investment per lot (7 shares) will range between Rs. 13,055 and Rs. 13,720 based on the upper price band.

Hyundai IPO Size

Hyundai Motor India is offering a total of 14,21,94,700 shares aggregating to Rs. 27,870.16 for this IPO which will be completely through an offer for sale. 

Hyundai IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for the Hyundai Motor India IPO. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong a company is. Thus, it is important to analyze the stock financially before investing in it.

Hyundai IPO Application Link

To invest in the Hyundai Motor India IPO, you can conveniently apply through the Rupeezy Dock platform. Our seamless process ensures a hassle-free experience, allowing you to bid for the IPO directly. Simply click the link below to start your application and secure your shares.

Apply for Hyundai IPO

Is Hyundai IPO a Good or Bad Investment? Final Thoughts

Hyundai IPO Review: The Hyundai Motor India IPO presents a promising investment opportunity, thanks to the company’s position as the second-largest carmaker in India, its steady revenue growth, and solid profitability. Hyundai’s diverse vehicle lineup, including electric cars and its strong presence in both domestic and export markets further enhance its appeal. 

However, investors should consider that the company's high Return on Net Worth (56.82%) is partly due to a significant reduction in reserves from special dividends. With a PE ratio of approximately 26.28 based on the upper price band, it's priced similarly to some peers. Furthermore, it faces stiff competition from established Indian brands along with global players.

While the IPO shows strong potential based on Hyundai’s financial performance, investors should conduct their research and carefully assess all factors before making any investment decisions.

For those interested in investing in such IPOs, you can open a demat account with Rupeezy. Our trading platform allows you to participate in various investment opportunities including initial public offerings.