 |
|
The upcoming initial public offering (IPO) of Hyundai Motor India (HMIL) is generating significant interest, with the company aiming to raise a substantial Rs 27,856 crore at the upper price band of Rs 1,960. The public offer is scheduled to open on October 15th and close on October 17th, with the company not receiving any proceeds from the offering. HMIL has established a strong presence in the Indian automotive market, ranking as the second-largest car manufacturer after Maruti Suzuki.
HMIL's management has stated that the valuation for the IPO is determined based on feedback from informed investors who consider the company's fundamentals, growth trajectory, and the extensive market it serves. The company has invested a significant Rs 30,103 crore ($5.09 billion) in India operations since inception, as of June 30, 2024, in tangible fixed assets and capital work in progress. It has committed to an additional investment of approximately Rs 32,000 crore for future initiatives.
The IPO is attracting positive attention from brokerages, with a majority assigning a 'Subscribe' rating, citing factors such as steady growth prospects, robust financial performance, and a strong product portfolio, particularly in the SUV segment. While limited listing gains are anticipated, brokerages expect HMIL to deliver healthy double-digit portfolio returns over the medium to long term. The company's sales and profit after tax have demonstrated consistent growth, registering a CAGR of 19.4% and 47.7%, respectively, over FY21-24. This growth has been driven by an 11% CAGR in sales volume and continuous improvement in EBITDA margin profile.
Hyundai Motor India is actively expanding its presence in the electric vehicle (EV) segment. The company plans to introduce four new EV models in the current financial year. To support the growing EV market in India, Hyundai is also investing in the EV charging infrastructure. The company anticipates strong growth in the Indian EV market by 2030. At the upper price band, the IPO is valued at 26.3x P/E based on FY24 earnings, slightly lower than Maruti Suzuki's P/E valuation of 30.4x for FY24 earnings.
Bajaj Broking has assigned a 'Subscribe for long term' rating to the IPO, acknowledging the company's bright prospects following the completion of its ongoing expansions, despite the issue being considered fully priced. The shares of Hyundai Motor India were trading at a premium of 5% in the unlisted market on October 11th. The IPO of Hyundai Motor India offers a compelling investment opportunity for investors seeking exposure to the growing Indian automotive market, particularly with the company's commitment to electric vehicles and its strong financial performance.
Source: Hyundai Motor India IPO: Here’s what management says about valuations and EV plans