The Indian stock market is gearing up for the biggest Initial Public Offering (IPO) in its history as Hyundai Motor India Limited is set to open its IPO on October 15, 2024. With an issue size of approximately Rs. 27,870 crore ($3.3 billion), this IPO has garnered immense attention from investors across the country. If you are considering participating in this monumental offering, here’s a simplified guide to the key details you need to know before investing.
IPO Dates and Schedule
The Hyundai Motor India IPO will be available for subscription starting Tuesday, October 15, 2024, and will close on October 17, 2024. The allocation of shares will be finalized by October 18, and refunds for unallocated shares will begin on October 21. The company’s shares are expected to be listed on the BSE and NSE by October 22, 2024.
IPO Price Band and Lot Size
Hyundai Motor India has set a price band of Rs. 1,865 to Rs. 1,960 per share for the IPO. Investors must place a bid for a minimum lot size of seven shares, meaning that the minimum investment required will be Rs. 13,720 for one lot at the lower end of the price band. This pricing makes it accessible for a wide range of retail investors.
The Largest IPO in Indian History
Hyundai Motor India’s IPO is being called the biggest-ever in India, surpassing previous large issues such as:
- LIC’s Rs. 21,000 crore IPO
- Paytm’s Rs. 18,300 crore IPO in 2021
- Coal India’s Rs. 15,199 crore IPO in 2010
No New Shares, Only Offer for Sale (OFS)
Unlike many IPOs that involve issuing new shares to raise capital, Hyundai Motor India’s IPO is purely an Offer for Sale (OFS), where the South Korean parent company Hyundai Motor Company will sell 17.5% of its stake in its Indian subsidiary. This will result in the sale of 142.2 million shares to retail and institutional investors. After the IPO, Hyundai’s parent company will continue to hold 82.5% of the company.
Allotment of Shares Among Investors
- 50% of the IPO is reserved for Qualified Institutional Buyers (QIBs).
- 15% is allocated for Non-Institutional Investors (NIIs).
- The remaining 35% is set aside for retail investors.
Additionally, 7,78,400 shares have been reserved for employees of Hyundai Motor India.
Lead Managers and Registrars
The IPO is managed by several top-tier financial institutions, including:
- Kotak Mahindra Capital
- Citigroup Global Markets India
- HSBC Securities & Capital Markets
- JP Morgan India
- Morgan Stanley India
The registrar for the IPO is KFin Technologies Limited.
Potential Risk Factors for Investors
While Hyundai Motor India is a well-established player in the Indian automobile market, potential investors should be aware of the risks involved:
- Dependence on Limited Suppliers: The company relies heavily on a select group of suppliers for its parts and materials. Any disruption in supply or a significant rise in material costs could negatively impact operations.
- Dependence on Parent Company: Hyundai Motor India relies on its parent company in South Korea for various aspects of its operations, including technology and support, which could be a vulnerability.
Competitive Peers in the Industry
Hyundai Motor India is one of the leading automobile manufacturers in India, competing with other giants such as:
- Maruti Suzuki India (P/E ratio: 17.93)
- Tata Motors (P/E ratio: 11.36)
- Mahindra & Mahindra (P/E ratio: 29.96)
These companies have a strong presence in the Indian market, but Hyundai’s long-standing performance and growth in the industry make it a solid competitor.
Hyundai’s Journey in India
Hyundai Motor India has been operational in India since 1996 and is known for offering 13 car models across different segments, including popular models like the Hyundai Creta, i20, and Verna. This IPO marks a significant moment for the Indian auto industry, as it’s the first IPO from an automobile manufacturer in over two decades. The last major auto IPO was Maruti Suzuki in 2003.
Grey Market Premium (GMP) Signals Profit Potential
According to market experts, Hyundai Motor India’s IPO is trading at a premium in the grey market. The current GMP is Rs. 60 per share, which suggests that the estimated listing price of the stock could be Rs. 2,020 per share. This indicates a potential 3.06% gain over the upper price band of Rs. 1,960. However, grey market trends are speculative, and investors should consider all factors before placing bets.
Should You Invest?
With Hyundai being a well-established brand in India, strong market presence, and the added advantage of no fresh share dilution, many experts believe this IPO offers a solid investment opportunity. However, like with all investments, potential investors should assess their risk tolerance, financial goals, and the overall market scenario before making a final decision.
