Hyundai Motor India IPO Sees 2.37x Oversubscription, Led by Institutional Investors

The initial public offering (IPO) of Hyundai Motor India Ltd. concluded with significant interest, achieving a subscription rate of 2.37 times by the final bidding day on October 17, 2024. The IPO, which was open from October 15 to October 17, saw investors bid for approximately 23.63 crore shares compared to the 9.97 crore shares available in the main book of the ₹27,870-crore issue, as per data from the National Stock Exchange (NSE).

The IPO subscription was driven primarily by qualified institutional buyers (QIBs), who oversubscribed their allocated portion nearly seven times. The non-institutional investors (NII) category achieved a 60% subscription of its allocation, while the retail investors’ segment reached a 50% subscription. Meanwhile, the employee quota, which offered a discount of ₹186 per share, was subscribed 1.74 times.

The shares were offered in a fixed price band ranging from ₹1,865 to ₹1,960 per share. This capital raise is noted as India’s largest-ever IPO, surpassing the previous record set by LIC’s ₹21,000 crore offering. The issue was structured as an ‘offer for sale’ (OFS) of 14.2 crore shares by the parent company, Hyundai Motor Global, which means the IPO proceeds will not go to Hyundai Motor India.

On the grey market, the shares traded at a mild premium of ₹14 above the IPO price, suggesting limited fluctuations. Market analysts largely recommended a ‘Subscribe’ rating for the IPO, citing Hyundai Motor India’s promising growth potential in the auto sector, its solid financial standing, and a strong lineup of SUV models. However, experts consider it a long-term investment prospect expected to yield returns over time.

Hyundai Motor India is the second-largest original equipment manufacturer (OEM) and passenger vehicle exporter in the country, holding a 14.6% domestic market share. However, there was a 10% decrease in sales on a year-on-year basis for September, with 64,201 units sold. Throughout the year, the company has sold 5.77 lakh units, mirroring the previous year’s figures.

In preparation for the IPO, Hyundai Motor India secured ₹8,315 crore from anchor investors by selling 4.24 crore shares at ₹1,960 each. The IPO’s success reflects Hyundai’s market strength, with a significant footprint in the mid-size SUV segment, boasting a roughly 38% market share as of June 2024. In financial terms, the company recorded revenues of ₹69,829 crore and profits of ₹6,060 crore in the last financial year, maintaining a profit margin of approximately 13%.

The underwriters for this IPO include prominent financial firms such as Kotak Mahindra Capital Company Ltd., HSBC Securities & Capital Markets Pvt. Ltd, JP Morgan India Private Ltd., Citigroup Global Markets India Private Ltd., and Morgan Stanley India Company Pvt. Ltd. Share allotment will be finalized on October 18, with stock listings on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) slated for October 22, 2024.