Hyundai Motor India IPO: How the auto major compares with listed peers on valuation, key financial metrics

Hyundai Motor India IPO: Hyundai Motor India Ltd. (HMIL) is all set for a stellar initial public offering (IPO) in what could likely be the biggest public issue in the Indian primary market. The exact amount to be raised has not been specified in the draft red herring prospectus (DRHP) filed by HMIL to capital markets regulator markets regulator Securities and Exchange Board of India (SEBI).

The upcoming IPO could surpass the record set by the Life Insurance Corp (LIC) of India’s $2.46 billion issue in May 2022, making it the largest in the country’s history. The Indian arm of the South Korean automaker Hyundai Motor Co., is currently the second-largest carmaker in India after Maruti Suzuki India.

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Hyundai Motor India IPO Details

Bankers privy to the IPO suggest that the carmaker aims to raise approximately $2.5 - $3 billion through the upcoming issue, valuing the company at $25-30 billion. The proposed IPO is entirely an offer for sale (OFS) of 142,194,700 equity shares by Hyundai Motor Company, with no fresh issue component, according to the DRHP.

Hyundai Motor India will offer up to 142.2 million equity shares for the IPO, representing 17.5 per cent of the post-offer paid-up equity share capital. Since the public issue is completely an OFS, Hyundai Motor India will not receive any proceeds of the IPO. The auto major intends to offer 35 per cent of the total equity on OFS in the IPO to the retail individual investors.

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In its draft papers, Hyundai Motor India said it expects that the listing of the equity shares "will enhance our visibility and brand image and provide liquidity and a public market for the shares". Kotak Mahindra Capital Co Ltd, Citigroup Global Markets India Pvt. Ltd., HSBC Securities and Capital Markets (India) Pvt. Ltd., JP Morgan India Pvt. Ltd., and Morgan Stanley India Co. Pvt. Ltd. are the book-running lead managers (BRLMs) of the proposed public issue.

The DRHP has not provided any timeline for the listing, but typically SEBI takes three to six months to approve, reject or seek more information on IPOs. With the IPO, Hyundai aims to unlock value for its Indian arm and help the Korean automaker shed its valuation discount compared to global and Asian peers.

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Hyundai Motor India: Comparison with listed peers

Here's how Hyundai Motor India compares with its listed industry peers – Maruti Suzuki India, Tata Motors, and Mahindra & Mahindra (M&M):

--Hyundai Motor India Ltd, the second largest carmaker in India after Maruti Suzuki India. The upcoming IPO will make it the country's first car maker to go public in over two decades since Maruti Suzuki India's in 2003.

The listing is seen putting Hyundai Motor India on a stronger footing compared to Maruti Suzuki, Tata Motors and other rivals as it could make future fundraising easier, without the need for dependency on its Korean parent.

Hyundai Motor India said it plans to focus on 'premiumisation'- selling more expensive cars, as well as increasing its EV market share and adding charging stations, where it lags behind Tata Motors. Hyundai India also said it wants to ship more cars, "strengthening" its position as an export hub.

Hyundai Motor India Ltd commenced operations in India in 1996 and currently sells 13 models across segments. Hyundai has won over buyers with its affordable cars such as Santro and sports-utility vehicle Creta. The company plans to launch new electric vehicles, establish charging stations and a battery pack assembly unit.

In FY24, Hyundai Motor India was India’s second-largest carmaker after Maruti Suzuki India in terms of passenger sales volumes. The carmkaer earned a revenue of ₹60,000 crore with a net profit of ₹4,653 crore in FY23, the highest amongst the non-listed car manufacturers in the country.

Also Read: Hyundai starts setting the stage for India’s biggest IPO

The auto major reported a seven per cent year-on-year (YoY) increase in total sales at 63,551 units in May 2024 compared to 59,601 units in the corresponding month last year. The domestic dispatch of vehicles to dealers saw a one per cent rise to 49,151 units from 48,601 units in the year-ago period. Exports grew 31 per cent in May to 14,400 units compared to 11,000 units a year ago.

--Maruti Suzuki India is currently India's largest auto giant and commands a market capitalisation (mcap) of of over ₹4 trillion. Maruti Suzuki's net sales in FY24 totaled ₹1,34,937.8 crore, or $16.2 billion, with a growth of 20 per cent on year. Net profit jumped 64 per cent to ₹13,209.4 crore, or $1.59 billion. The the increase in production and a moderation in commodity cost inflation supported the car manufacturer's growth in the previous fiscal year.

--Tata Motors recently lost the spot as the second-largest auto major among listed firms to M&M and is now the third most valued firm with an mcap of ₹3.3 trillion. The Tata Group-company became net debt in FY24 and reported a surge of 222 per cent in net profit during the March quarter driven by a tax credit surge. The auto major's British luxury car unit, Jaguar Land Rover (JLR) reported the highest-ever revenue for FY24 at £29 billion, up 27 per cent compared to FY23, while net profit for FY24 stood at £2.6 billion.

--M&M on Friday, June 14, outshined Tata Motors to become the second-largest auto giant among listed firms in India with a mcap of ₹3.6 trillion. Based on FY24 volumes, M&M is the world's largest tractor maker, and has laid out plans to scale up in the domestic as well as the overseas market, according to M&M's investor day presentation. M&M said that it intends to rollout a total capex of ₹27,000 crore between FY25-27 in its recent investor presentation. It also plans to beat the industry's average revenue growth by fiscal 2027.