Hyundai Motor India sets the stage for record-breaking IPO

Hyundai Motor India is gearing up for an exceptional milestone with its proposed ₹25,000-crore initial public offering (IPO), slated for launch on October 14, according to a PTI report. This highly anticipated IPO is set to surpass the Life Insurance Corporation's (LIC) ₹21,000-crore offering, making it the largest in Indian history. The IPO will consist solely of an offer-for-sale (OFS) of 142,194,700 equity shares by its promoter, Hyundai Motor Company, as per the draft red herring prospectus (DRHP) filed with SEBI.

Details of the offer

Hyundai plans to dilute a 15 to 20 % stake to raise approximately $3 billion (₹25,000 crore) through the IPO. This strategic move will not only raise significant funds but also mark Hyundai Motor India as the first automaker to go public in nearly two decades since Maruti Suzuki's listing in 2003. It's a pivotal moment for Hyundai, as it continues to hold the position of the second-largest carmaker in India, following Maruti Suzuki.

IPO objectives and company insights

The public issue is entirely an offer-for-sale, which means that Hyundai Motor India will not receive any proceeds from the IPO. The aim is to enhance visibility and brand image, providing liquidity and a public market for the shares. Established in 1996, Hyundai Motor's Indian arm has shown robust financial health. For the nine months ending December 31, 2023, the company reported a revenue from operations of ₹32,488.34 crore, with a net profit of ₹4,382.87 crore and a profit margin of 13.5%.

The financial framework and lead managers

The DRHP highlights that the book-running lead managers for the proposed IPO include prestigious firms such as Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, HSBC Securities & Capital Markets Pvt Ltd, JP Morgan India Private Limited, and Morgan Stanley India Company Pvt Ltd. Kfin Technologies Limited has been appointed as the key issue registrar.

Investor outlook

The announcement of Hyundai Motor India's IPO has sparked significant interest among investors looking to invest in IPO. With its strong market presence and historical performance, Hyundai offers a promising opportunity for those seeking to diversify their portfolios with substantial automotive sector holdings. As the IPO date approaches, potential investors are advised to consider the company's market position, financial health, and the broader economic conditions affecting the automotive industry. This IPO presents a unique opportunity to invest in a leading automotive player on a global platform, making it a noteworthy option for those looking to invest in an IPO.