South Korean parent Hyundai Motor Company-owned Hyundai Motor India is going to create the history in the India's capital markets by launching the biggest ever IPO this week, after the Life Insurance Corporation's Rs 21,000 crore public issue in 2022.
Here are 10 key things to know before subscribing the issue:
1) IPO Date
The public issue of the country's second largest passenger vehicle maker will remain open for subscription between October 15 and October 17, 2024. The anchor book details of the IPO will be disclosed in the evening on October 14.
2) Price Band
The price band for Hyundai Motor India IPO has been fixed at Rs 1,865-1,960 per share.
3) IPO Size
The IPO consists of entirely offer-for-sale of 14.2 crore equity shares by its parent firm Hyundai Motor Company. The automobile company targets to Rs 27,870.2 crore through maiden public issue at the upper price band.
The firm has reserved 7,78,400 equity shares for its employees. They will get those shares at a discount of Rs 186 per share to the final issue price.
Also read the Moneycontrol's Exclusive note on Hyundai Motor India IPO
All the IPO funds (excluding issue expenses) will be received by the parent company as it is an offer-for-sale. Hence, the objective is to complete the said offer-for-sale by the promoter, and achieve the benefits of listing on the stock exchanges.
5) Reservation of shares for Investors
The company has reserved half of the net public issue size (IPO less the employees portion) for qualified institutional buyers, 15 percent for non-institutional investors, and the remaining 35 percent shares for retail investors.
Investors can bid for a minimum of seven equity shares in the IPO and in multiples of seven shares thereafter. Thus, retail investors can invest a minimum of Rs 13,720 in the IPO (7 shares x Rs 1,960), while their maximum investment would be Rs 1,92,080 (98 shares x Rs 1,960) as their investment in IPO can not exceed the limit of Rs 2 lakh.
Hyundai Motor India is the second largest auto OEM (original equipment manufacturer) in the Indian passenger vehicles segment with nearly 15 percent market share, after Maruti Suzuki India. Its domestic market share declined from 17.6 percent in FY20 due to competition from domestic peers like Maruti Suzuki India, Tata Motors and Mahindra & Mahindra.
It is the second-largest manufacturing and supply chain ecosystem within the Hyundai Motor Group outside Hyundai’s home country, Korea.
Also read: IPO-bound Hyundai India to pump in Rs 32,000 crore, raise capacity to 1.1 million units
It has a portfolio of 13 models across multiple passenger vehicle segments such as sedans, hatchbacks, sports-utility vehicles (SUVs) and battery electric vehicles (EVs). The company also manufactures transmissions and engines parts. It had 1,377 sales outlets and 1,561 service centres in India as of June 2024.
The company operates manufacturing plant in Chennai with an installed annual capacity of 8,24,000 units. In December 2023, it acquired plant in Talegaon, Maharashtra, which is expected to commence commercial operations partly in the second half of FY26.
Management expects its combined annual production capacity of the Chennai and Talegaon plants to increase to 9,94,000 units when the Talegaon plant is partly operational and to 10,74,000 units when fully operational.
7) Financials
The company has recorded good financial performance in the past years. Net profit in the year ended March 2024 grew by 28.7 percent to Rs 6,060 crore compared to previous fiscal, and revenue increased by 15.8 percent to Rs 69,829 crore compared to the fiscal 2023. EBITDA (earnings before interest, tax, depreciation and amortisation) for FY24 soared 21 percent to Rs 9,132.6 crore with margin expanding by 58 bps to 13.08 compared to previous fiscal.
In FY24, passenger vehicle sales contributed 86 percent to total revenue and 6 percent contribution
For three months period ended June 2024, its profit stood at Rs 1,489.6 crore, growing 12.1 percent over the same period last year with healthy operating numbers. EBITDA for the quarter grew by 17.2 percent to Rs 2,340.3 crore and margin increased by 148 bps to 13.5 percent compared to corresponding period of last year.
Revenue during the first quarter of fiscal year 2025 stood at Rs 17,344.2 crore, increasing by 4.3 percent over Rs 16,623.5 crore in June 2023 quarter.
8) Promoter and dividend payout
Korea-based Hyundai Motor Company (HMC) is the owner of Hyundai Motor India with 100 percent shareholding. The Indian unit has paid total dividend of Rs 10,782.4 crore in the fiscal 2024, against total dividend of Rs 4,653.4 crore in FY23, and dividend payout of Rs 1,493.4 crore in FY22.
It had cash and cash equivalents of Rs 17,741.15 crore at the end of March 2023. But due to special dividend payout of Rs 10,782.4 crore, there was a reduction in its cash and cash equivalents and bank balances to Rs 9,017.3 crore by the end of fiscal 2024.
9) Risk Factors
Nearly all the brokerages advised subscribing to the public issue while listing out the following risks which seem to have been the reason for fall in grey market premium:
a) HMI has been unable to increase its market share beyond 20 percent
b) It has seen increasing competition from not only listed peers but also unlisted player like Kia Motors (which is other HMC group company), Honda Cars India, Skoda Auto India, MG Motor India, Renault India, Volkswagen India
c) Two of Group companies, Kia Corporation and Kia India, are in a similar line of business as Hyundai which may involve conflict of interests, which could adversely impact business.
d) Any potential increase in the royalty rate by the parent company on account of technology transfer or provision of critical components or services could impact future earnings of Hyundai Motor India.
e) Slowdown in electric vehicle demand with no Hybrids on offer
f) Company's 67 percent of volume is derived from SUV segment
g) Any disruption in its Chennai plant may affect production and finances
h) Increases in the prices of parts and materials required for their operations could adversely affect their business and operations.
i) Hyundai depends on a limited number of suppliers for parts and materials. Any interruption in the availability of parts and materials could adversely impact their operations.
10) Allotment & Listing Dates, Hyundai Motor India GMP
The passenger vehicle maker will finalise the basis of allotment of IPO shares by October 18 and its equity shares will be credited to demat accounts of successful investors by October 21.
The much-awaited trading in Hyundai shares will commence on the BSE and NSE, effective October 22.
Hyundai Motor India IPO shares are trading at around 2-3 percent premium over the upper price band in the grey market, which declined further from 5-7 percent quoting last week, the market observers said. Before the announcement of price band, the premium was 15-20 percent. The grey market is an unofficial platform for trading in IPO shares till the listing.
The book running lead managers that handling the India's largest IPO are Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities and Capital Markets (India), JP Morgan India, and Morgan Stanley India Company. KFin Technologies is the registrar to the offer.
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