Hyundai Motor's shares jump to record high as investors cheer India IPO plans

Hyundai Motor's India unit last week sought regulatory approval for a listing in Mumbai, which could be the nation's biggest and will see the South Korean parent sell a stake of up to 17.5 percent in the company.

Shares of Hyundai Motor Company surged to a record high on June 17 after the South Korean carmaker sought filed documents with the Securities and Exchange Board of India (Sebi) for its proposed initial public offering (IPO).

The investors cheered the carmaker’s listing plans, which would provide a boost to Hyundai Motor’s presence in the world’s third largest auto market.

The firm’s stock price rose as much as 6.3 percent on June 17 to 285,000 won ($206.47), and closed up 3.9 percent -- a record high close that lifted its market capitalisation to 58.3 trillion won, Reuters reported. The benchmark KOSPI closed 0.5 percent lower.

Hyundai’s suppliers and subsidiaries also recorded a surge, including SL Corporation, which jumped as much as 14 percent while HL Mando Co gained 5.2 percent, and Kia Corp rose 4.6 percent.

"Investors are betting on Hyundai Motor's growth in the Indian market, one of Hyundai Motor's four biggest revenue generating markets along with the United States, South Korea and Western Europe," said analyst Song Sun-jae with Hana Securities to Reuters.

"With the India IPO, Hyundai Motor could better accelerate its plans for the India market, such as getting dibs on the electric vehicle (EV) market there ahead of their competitors by producing EVs in the country by adjusting its existing production site," Sun-jae added.

Hyundai Motor's India unit last week filed draft papers with the market regulator to raise around $3 billion via an initial public offer (IPO) at a targeted valuation between $18 billion to $20 billion, multiple sources in the know told Moneycontrol on the condition of anonymity. Via the IPO, the company is looking to sell a stake of up to 17.5 percent.

If the listing plans fructify, this deal, a pure OFS or offer for sale by the promoter, would be India Inc's biggest-ever IPO and beat the earlier record set by state-owned LIC's $2.7 billion listing in 2022.

Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital and Morgan Stanley are the i-banks advising on the transaction with law firm Shardul Amarchand Mangaldas acting as the company counsel and Latham and Watkins acting as the international counsel.

Hyundai has been locked in competition with rivals including Maruti Suzuki India Ltd and Mahindra & Mahindra Ltd as India’s car demand shifts toward sports utility vehicles and electric models.

(With inputs from agencies)