By the close of the second day, the IPO managed to attract a subscription rate of 20%, a respectable figure that, while indicating keen interest, also showcased the room for growth as the bidding process continued. This level of subscription unfolded within the context of nearly 1.98 crore consolidated share bids being placed against the backdrop of 9,97,69,810 shares that were made available for the taking.
Leading the charge in this financial foray were the retail investors, who showcased their enthusiasm and confidence in Hyundai India by subscribing their portion by 29%. Following closely were the non-institutional investors who had, thus far, booked 15% of their allotted share. The qualified institutional buyers (QIBs), on the other hand, demonstrated cautious optimism, securing bids for merely 13.91 lakh shares or 5% of the 2,82,83,260 shares earmarked for them.
The structure of this IPO was notably unique as it comprised entirely of an offer for sale (OFS) involving 14.2 crore shares. These shares were to be offloaded by Hyundai Motor Global, the parent company, meaning all proceeds from this capital-raising exercise would funnel directly back to it. Despite this direct financial benefit to the parent company, the management of Hyundai India was explicit in their intention to channel these funds into research and development efforts, along with the pursuit of new and innovative offerings within the automobile sector.
Embedded in this ambitious venture was the detangling of Hyundai IPO’s price band. The company meticulously set the price range at Rs 1,865-1,960 per share, offering investors the opportunity to bid for shares in lots of seven. This strategic pricing underscored not only the intrinsic value seen in the company’s shares but also the calculated approach taken towards maximizing investor interest and participation.
Moreover, in the realm of the unlisted market, Hyundai’s shares experienced a notable surge, trading at Rs 65 above the listed issue price on the eve of the IPO’s opening. This marked a significant increase from their earlier position of Rs 35-40 on the first day. Such a movement in the grey market premium (GMP) underscored a buoyant optimism surrounding the IPO, with the premium escalating to 3.3% over the IPO price, up from 1.7% observed on Tuesday.
A multitude of analysts, having scrutinized the company’s market position, financial health, and future prospects, overwhelmingly encouraged long-term subscriptions to Hyundai India’s IPO. The consensus stemmed from Hyundai’s robust presence in the Indian market, complemented by its poised readiness to tap into the burgeoning growth opportunities in the passenger car segment. Firms like ICICI Direct heralded Hyundai for its steady growth prospects, healthy financial standings, and an attractive SUV product slate. Anand Rathi, merging valuation with foresight, noted that the company’s upper band valuation at 26.2x its FY24 earnings, alongside a 26.7x valuation against annualized FY25 earnings, although fully priced, was worthy of a long-term subscription recommendation.
Hyundai, as the second-largest carmaker in India, bolsters an impressive portfolio that spans 13 passenger vehicle models across a variety of segments such as sedans, hatchbacks, and SUVs. The strategic emphasis on leveraging strong local manufacturing capabilities to become Hyundai Motor’s largest production base in Asia was a testament to its ambitious growth trajectory.
The company operates two state-of-the-art production facilities located in Chennai, with a stellar installed capacity of 8.24 lakh units per annum, already running at over 90% capacity utilization. This operational proficiency was mirrored in the company’s recent financial performance. For the quarter ending June 2024, Hyundai Motor India reported a revenue of Rs 17,344 crore, evidencing growth from Rs 16,624 crore in the same period the previous year. The domestic market was the primary revenue driver, contributing 76%, with exports accounting for the remaining 24%.
Profitability also witnessed an upward trajectory, with the net profit for the quarter reaching Rs 1,489.65 crore, an improvement from Rs 1,329.19 crore reported in the preceding year. Such financial metrics painted a picture of robust health and optimistic future prospects for the company.
The IPO was managed by a consortium of leading financial institutions, including Kotak Mahindra Capital, Citigroup Global, HSBC Securities, JP Morgan, and Morgan Stanley, with KFin Technologies serving as the registrar to the offer. This alignment of industry giants underscored the importance and scale of the IPO in the broader financial ecosystem.
In conclusion, Hyundai India’s IPO journey is more than just a financial venture; it is a testament to the vibrancy and dynamism of India’s automobile sector. With the company’s strong foundation, strategic vision, and the promising support of both domestic and institutional investors, Hyundai India is poised not just to navigate the currents of the financial market but to sail forth into a future marked by innovation, growth, and prosperity. For those interested in keeping abreast of similar trending news and analysis, be sure to check out DeFi Daily News.
(Disclaimer: The recommendations, suggestions, views, and opinions provided by the experts are their own. These insights do not necessarily reflect the views of Economic Times.)
