Hyundai Motor India’s (HMIL) initial public offering (IPO), the largest to date, sailed through on the final day, with help from qualified institutional buyers (QIBs).
The IPO, which opened on October 15, was subscribed 2.37 times overall. The QIB portion was subscribed nearly seven times, with bids for 19.72 crore shares against 2.82 crore shares on offer. The quota for employees was subscribed 1.74 times. The issue received lukewarm responses from wealthy and retail investors, with their quotas getting subscribed 0.6 times and 0.5 times, respectively. Barring New India Assurance, this is the lowest retail subscription among the 20 largest offerings to date. Eight of these offerings had remained under-subscribed in the retail portion.
The company hopes to raise ₹27,870 crore at the upper end of the price band. It had raised ₹8,315 crore from anchor investors from 225 funds at a price of ₹1,960 each a few days ago. The issue is an offer for sale that will see its promoters and promoter group selling 17.5 per cent stake. HMIL will not receive any proceeds from the offer.
HMIL holds 14.6 per cent market share in the domestic passenger vehicle (PV) market in Q1FY25, second to Maruti Suzuki, which has 41 per cent share in this category. However, HMIL is the market leader by volume in the mid-size SUV segment with about 38 per cent share as of June 2024. It is also India’s second-largest exporter of PVs from April 2021 through June 2024.
“At the upper price band of ₹1,960, the issue is priced at 26.3x FY24 P/E and looks reasonably priced compared with Maruti, which is trading at 29.8x. We expect HMIL to be a key beneficiary of growth in the PV segment due to its strong presence in the SUV segment. It is also planning a slew of launches in the EV space. The company has planned an overall capex of ₹32,000 crore to develop capabilities in EV (including battery assembly and charging stations) and ramp up overall manufacturing capacity over FY23-32,” said a note by Motilal Oswal Financial Services, recommending ‘subscribing for the long term’.
