 "Hyundai, Hyundai motors, Hyundai IPO")
Hyundai is India’s No. 2 carmaker by sales with about a 15% share of the country’s passenger vehicle market and trails only Maruti Suzuki. (Photo: Bloomberg)
On October 15, 2024, Hyundai Motor India has officially launched its highly anticipated initial public offering (IPO) with a bang, raising a staggering $3.3 billion. This historic event marks the largest share sale in the country to date, garnering an impressive 18% subscription on the very first day of bidding. Employees played a significant role in this remarkable debut, snapping up four-fifths of the shares that were reserved for them.
First Day of Bidding Excitement
The IPO, which is set to run over three days, is especially notable as it’s the first public offering by an automobile manufacturer in India in two decades. This monumental event concludes on October 17, Thursday. Just a day before the bidding opened, big-time institutional investors, including finance giants like BlackRock and Fidelity, wasted no time in purchasing shares worth nearly $989.4 million as part of the offering.
This IPO is not just another entry in the Indian market; it’s the first of its kind for Hyundai outside of South Korea. Current market conditions are exceptionally favorable, with many companies eyeing public offerings amidst soaring stock prices.
Statistics on Subscription
According to recent reports, over 260 companies in India have secured more than $9 billion through IPOs so far this year. This figure already surpasses the $7.42 billion raised during the same period last year, illustrating a thriving market. Hyundai Motor’s IPO is the second largest globally this year, trailing only behind Lineage Inc’s impressive $5.1 billion public offering in the U.S. in July.
Employees of Hyundai India showed their commitment and belief in the company, bidding for 80% of the 778,400 shares that were allotted for them. Recognizing their dedication, the company provided a discount of 186 rupees per share for eligible staff in this offering, with shares priced between 1,865 to 1,960 rupees each. This move comes after protests earlier this year from workers at the company’s main plant in Sriperumbudur, near Chennai, where they demanded a larger share allocation.
In addition, qualified institutional buyers—comprising foreign investors, banks, and mutual funds—claimed about 5% of the shares allocated for them, while retail investors showed participation by bidding for 26% of their reserved shares.
Market Valuation Goals
Hyundai Motor India is aiming for a market valuation of $19 billion at the higher end of the IPO pricing range. To give you some perspective, this valuation represents roughly 40% of the worth of its parent company in South Korea.
Trading for Hyundai shares is expected to commence on October 22, 2024, and all eyes are on the stock as it prepares to enter the market.
Hyundai’s Position in the Indian Market
Hyundai ranks as India’s second-largest carmaker, holding around a 15% share of the country’s passenger vehicle market, following the frontrunner, Maruti Suzuki. However, the competition is heating up in recent years. Domestic competitors, Tata Motors and Mahindra & Mahindra, have gained ground by rolling out new SUVs that have resonated well with Indian consumers.
With the landscape rapidly changing, Hyundai aims to increase its production capacity. This strategic move is essential for the company to not only close the gap with Maruti Suzuki but also maintain its slim lead over Tata and Mahindra.
Future Prospects and Challenges
As Hyundai Motor India digs deeper into the stock market, one major factor that the company must consider is the evolving preferences of Indian consumers. The popularity of SUVs has taken the market by storm, and Hyundai has to launch the right products to compete effectively.
In addition to expanding its model lineup, improving customer service and maintaining competitive pricing will be crucial for Hyundai in the coming years. The company has a strong legacy in India, but it must innovate to keep up with the expectations of newer generations of buyers.
Conclusion
As Hyundai takes this monumental step in its journey within the Indian automobile sector, it’s clear that the stakes are high. The success of this IPO not only reflects investor confidence but also the company’s future standing in a highly competitive market.
Hyundai’s entry into the stock market represents a significant moment in Indian automotive history. With institutional backing, employee involvement, and an optimistic outlook, the company is on a promising path. As we await October 22, the day trading will start, the market will keenly follow how Hyundai’s stock performs and what this means for the future of automakers in India.
With the automotive industry racing ahead, it’s going to be exciting to see how Hyundai adapts and continues to thrive. The response to this IPO has undoubtedly set the stage for what comes next for the motoring giant. Stay tuned as the story unfolds.
