Hyundai Motor India Limited is coming up with an IPO size of Rs. 27,870.16 crore. The company is going for entire shares of the offer-for-sale issues of Rs. 27,870.16 crore, which will open on 15th October 2024. The issue will close on 17th October 2024 and be listed on the stock exchange on 22nd October 2024. In this article, we will explore the Hyundai Motor India Limited IPO Review and analyze its strengths and weaknesses. Let’s dig in!
Hyundai Motor India Limited IPO Review – About the Company
Hyundai Motor India Limited (HMIL) was established on May 6, 1996, and its headquarters are located in Gurugram, Haryana. The company is a subsidiary of Hyundai Motor Company, a prominent South Korean automotive manufacturer. Since its inception, Hyundai Motor India Limited has grown to become one of the leading automotive manufacturers in India.
Hyundai Motor India has been the second-largest passenger vehicle manufacturer by sales volume since 2009. The company boasts two integrated plants in Chennai and recently acquired a new manufacturing facility in Talegaon to boost capacity. As of June 2024, the company has sold over 12 million passenger vehicles in both domestic and export markets. Hyundai Motor India Limited pays a royalty of 3.5% of revenue to the parent company, which arises from the sale of passenger vehicles or parts.
Hyundai has also significantly contributed to the Indian automotive market, holding a market share of 14-17% in passenger vehicle sales. Hyundai Motor Indian Limited has exported its vehicles to more than 190 countries worldwide, including European, African, and Asian markets. The company operates a network of 1,377 sales points and 1,561 service points across India.
Hyundai offers a wide range of passenger vehicles across sedans, hatchbacks, and SUVs. Some of its most popular models include the Hyundai Venue, Creta, and i20. Hyundai has also entered the electric vehicle segment with models like Kona and Ioniq 5. Although the company manufactures parts such as transmissions and engines. The company emphasizes advanced technology and safety features in its vehicles, ensuring customer satisfaction.
Hyundai Motor India Limited IPO Review – Industry Overview
The Indian automobile industry significantly contributes to the nation’s economy, accounting for 7.1% of GDP and ranking as the third-largest market globally. In the fiscal year 2024, it produced 28.43 million vehicles, including various types such as passenger cars and two-wheelers.
Projections indicate that by 2029, the industry’s value could reach $187.85 billion, reflecting a robust growth rate of 8.20% CAGR from $126.67 billion in 2024. India’s passenger vehicles market is projected to grow from $39.82 billion in 2024 to $54.76 billion by 2030, reflecting a CAGR of 5.45%.
In India, the passenger vehicle market is thriving, with sales expected to reach 4 million units in 2024. The Indian government aims for 30% of new vehicle sales to be electric by 2030, fostering sustainable mobility and expanding opportunities within the electric vehicle sector, highlighting the market’s robust expansion.
Hyundai Motor India Limited IPO Review – Financial Highlights
Coming into the financial analysis of Hyundai Motor India Limited, the company revenue has increased from 60,307.58 crore in FY23 to 69,829.06 crore in FY24, which has grown by 15.79%. Hyundai Motor India Limited has earned revenue of 17,344.23 crore in the first quarter of FY25. The revenue of the company has grown at a CAGR of 21.40% over the last two years.
Hyundai Motor India Limited has made revenue from India by 77.66%, Africa by 3.53%, Latin America by 6.66%, the Middle East and Europe by 11.21%, and the rest from other countries in FY24. The revenue has come from the vehicle sale, which contributed 85.98%, parts by 6.18%, the sale of services by 6.07%, and other operating revenue by 1.77% in FY24.
The company has sold a total vehicle of 7,77,876, which includes domestic sales of 6,14,721 units and exports of 1,63,155 units in FY24 Hyundai Motor India Limited’s net profit has increased by 28.68%, which is from 4,709.25 crore in FY23 to 6,060.04 crore in FY24.
In Q1 of FY25, the net profit of the company is to be 1,489.65 crore. The net profit has grown at a CAGR of 44.52% over the last two years. Hyundai Motor India Limited’s EBITDA margin has increased from 12.52% in FY23 to 13.08% in FY24. The PAT margin has also improved from 7.67% in FY23 to 8.50% in FY24.
Hyundai Motor India Limited’s ROCE massively improved from 28.75% to 62.90% in FY24. The reason for increased ROCE is that the dividend was paid to the parent company, which leads to a decrease in the net worth value of the company. Further, the company has decreased total borrowings from 1,158.6 crore in FY23 to 767.92 crore in March FY24. In Q1 FY25, the company has reduced its total borrowing of 758.14 crore as compared to March 2024.
Listed Peers of the Company
Hyundai Motor India Limited’s peer competitors are Maruti Suzuki India Limited, Tata Motor Limited, and Mahindra and Mahindra Limited. Hyundai Motor India Limited has less revenue compared to the other peer competitors listed in the stock market. However, Hyundai Motor Limited stands out with an impressive return on net worth of 56.82%, significantly outperforming its competitors such as Maruti Suzuki (15.75%), Tata Motor (36.98%), and Mahindra & Mahindra (17.02%).
This indicates Hyundai’s superior efficiency in generating profits from its shareholders’ equity compared to other major players in the Indian automotive market.
The below images show the comparison of peer competitors of Hyundai Motor India Limited.
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Strengths of the Company
- Market Contender: Hyundai Motor India has been the second-largest passenger vehicle manufacturer in India since FY09, showcasing consistent leadership and brand strength.
- Diverse Product Portfolio: Hyundai offers 13 models across multiple segments, including sedans, hatchbacks, SUVs, and electric vehicles, catering to a broad consumer base.
- Innovative Technology: Hyundai has consistently introduced industry-first features like connected car technology (Bluelink), daytime running lights, and advanced safety features, enhancing its market appeal.
- Export Powerhouse: Hyundai exports to over 190 countries, contributing significantly to India’s passenger vehicle exports and bolstering its global presence.
- Robust manufacturing capabilities: The Chennai plant is among India’s largest, with an annual capacity of 8,24,000 units. This enables high-scale production to boost the company.
- Recognized Brand Value: Hyundai’s brand is one of the top 32 most valuable brands globally, with continuous growth over the years.
- Dealer Network: Hyundai has a strong sales network with 1,377 sales outlets and 1,561 service centers across India.
Weaknesses of the Company
- Dependence on Domestic Market: A significant portion of revenue comes from India, making the company vulnerable to local economic downturns or regulatory changes.
- Cybersecurity Vulnerabilities: Recent data breaches have impacted customer trust, revealing a need for stronger cybersecurity measures to protect sensitive information.
- Limited EV Portfolio: Hyundai’s electric vehicle offerings in India are limited, focusing mainly on higher-end models, such as the Ioniq 5, which narrows its consumer reach.
- Over-dependence on SUVs: While the SUV segment is strong, overreliance on this category may expose the company to risk if consumer preferences shift.
- High Competition in Compact Cars: Hyundai Motor India faces intense competition in the compact car segment from other established brands, making it difficult to sustain dominance.
- Market Share Decline in Sedans: Hyundai Motor India has a wide range portfolio of vehicles, it has seen a declining market share in the sedan segment compared to the growing popularity of SUVs.
- Limited Luxury Vehicle Offerings: Hyundai primarily focuses on the mass-market segment, limiting its appeal among luxury car buyers who prefer premium brands like BMW or Audi.
Hyundai Motor India Limited IPO Review – Key IPO Information
The shares of Hyundai Motor India Limited’s price in the grey market were trading at a 7.40% premium as of October 9th, 2024. The shares in Grey Market traded at Rs 2,105. This gives it a premium of Rs. 145 per share over the cap price of Rs. 1,960.
Promoter: Hyundai Motor Company
Book Running Lead Manager: Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, HSBC Securities and Capital Markets (India) Private Limited, J.P. Morgan India Private Limited, Morgan Stanley India Company Private Limited
Registrar to the Offer: KFin Technologies Limited
The Objective Of The Issue: The IPO size of Rs. 27,870.16 crore includes an offer for sale. The funds are for promoters of the company.
Conclusion
In conclusion, Hyundai Motor India Limited has a strong market position and innovative approach in the automotive industry. The company has a well-established brand and a diverse product portfolio, including popular models across various segments. Hyundai’s commitment to quality and advanced technology enhances its appeal to consumers.
With a robust manufacturing network and extensive sales points, the company is well-equipped to meet growing demand. As it prepares for this significant financial milestone, Hyundai continues to strengthen its presence in both domestic and international markets.
How do you think their IPO will impact the automotive market? What features would you love to see in future Hyundai models? Will you apply for the Hyundai Motor India Limited IPO? Let us know in the comments below.
Written By, Nikhil Naik
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