How Hyundai India IPO may affect Maruti Suzuki, Tata Motors and M&M shares?

Hyundai India IPO: The Indian primary market is on the cusp of a historic event as it will witness the biggest-ever initial public offering (IPO) in the country. According to stock market experts, Hyundai India is offloading around 13 per cent of its stake in the upcoming IPO. Still, the giant size of the company would enable the company to generate nearly ₹25,000 crore, leaving LIC — the biggest-ever IPO of India — by a considerable margin. Experts added that Hyundai India IPO valuations indicate that the upcoming auto stock in the Indian market may outperform its leading peers like Maruti Suzuki, Tata Motors, Mahindra & Mahindra (M&M), etc.

Hyundai India IPO news

Speaking on Hyundai India IPO size and other details, Sandeep Pandey, Founder of Basav Capital, said, "Hyundai India IPO is going to create a history in the Indian primary market as the upcoming IPO is tipped to trump LIC's existing record of biggest-ever IPO in the Indian primary market. As per the company's financials, HHyundai India IPO valuations would be around ₹25,000 crore. The company is expected to generate a whopping amount by diluting its 13 percent stake. As it is not yet clear whether it will be a 100 percent fresh issue, a mix of fresh shares and OFS or completely OFS, the market is expecting that a major portion of the upcoming IPO will go to the balance sheet of the company, which is expected to enhance its competitiveness against its leading peers like Maruti Suzuki, M&M, Tata Motors, etc."

On how Hyundai India IPO may affect the Indian auto segment on Dalal Street, Manish Chowdhury, Head of Research at StoxBox, said, “The big-bang and much-awaited IPO from the second largest PV OEM in India in terms of sales volumes is likely to positively impact the valuation metrics of the overall Indian automobile sector. With better profitability metrics and premium positioning vis-à-vis Maruti Suzuki, Hyundai Motor looks poised to further strengthen its position both in domestic and export markets. The company is also looking to up the ante in the EV space and has a pipeline of products to be launched in the next 1-2 years. With the company increasingly focusing on optimizing the overall value chain in the EV space by setting up manufacturing facilities in India, we may see increased competitive intensity with established players such as Tata Motors and M&M.”

"With the PV industry expected to grow in mid-single digits over the next few years, we sense that Hyundai Motor would further strengthen its positioning in the Indian automobile landscape owing to superior financial metrics, premium product mix tilted towards SUV segment, strong parentage of Hyundai, and agility to adapt to the changing consumer preference through continuous R&D and innovation," said StoxBox expert.

Amit Goel, Co-Founder & Chief Global Strategist at Pace 360 said, “Hyundai and Maruti Suzuki are in the Indian automobile market with the same line of business. A successful IPO for Hyundai could mean increased investment in research and development, expansion of production capacities, and aggressive marketing efforts. This could intensify competition for Maruti Suzuki in terms of market share and sales. The success of Hyundai's IPO could boost investor confidence in the automotive sector, leading to increased interest and investment in automobile stocks overall, including Maruti Suzuki, Tata Motors and M&M. Investors who are interested in the automobile sector might reallocate their investments based on the perceived growth potential and valuation of Hyundai. If Hyundai's IPO is seen as more attractive in terms of growth prospects or valuation, some investors might shift their investments, potentially putting downward pressure to the share prices. Conversely, if Hyundai's IPO is perceived as overvalued or if it underperforms post-IPO, it could create negative sentiment in the sector, affecting all major players including Tata Motors, M&M, and Maruti Suzuki.”

The Pace 360 expert said that Tata Motors and M&M are also key competitors in different segments (Tata Motors with passenger and commercial vehicles, and M&M with SUVs and utility vehicles). Hyundai's IPO could indirectly affect their strategies as well, depending on how Hyundai plans to use the funds and expand its market presence.

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