3 mins read
06-August-2024
The Hyundai Motor India Limited IPO is one of the most anticipated public offerings in the Indian market. As Hyundai prepares to make its stock market debut, understanding the details of this IPO is crucial, especially for beginner investors. This article will guide you through everything you need to know about the Hyundai Motor IPO, from the offer structure to the financial performance and potential risks.
Manufacturing: The company operates a state-of-the-art manufacturing facility in Tamil Nadu, which can produce a wide range of vehicles catering to different segments.
Market presence: Hyundai has established itself as one of the leading automobile manufacturers in India, known for its innovative models and customer-centric approach.
Product portfolio: The company offers a diversified product range, including popular models like the Hyundai Creta, i20, and Verna, which have consistently performed well in the Indian market.
Terminologies explained:
Revenue from operations: Income generated from the company's core business activities, such as sales of cars in domestic and export markets.
Domestic: Revenue generated from sales within India.
Exports: Revenue generated from sales in international markets.
Profit for the year: The net income after all expenses, taxes, and costs have been deducted.
EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortisation; a measure of a company’s operating profitability.
EBIT: Earnings Before Interest and Taxes; indicates a company's profitability from its core operations.
Net worth: Total assets minus liabilities, representing the equity shareholders hold in the company.
ROCE (Return on Capital Employed): A ratio that indicates the efficiency and profitability of a company’s capital investments.
Innovative technology: The company is known for incorporating advanced technology and innovative features in its vehicles, which enhances its appeal among customers.
Extensive distribution network: Hyundai has a robust distribution network across India, ensuring wide availability and strong after-sales service.
Brand reputation: Hyundai enjoys a strong brand reputation in India, built over decades of delivering quality products and excellent customer service.
Economic sensitivity: The automotive industry is closely tied to economic cycles. Any downturn in the economy could affect consumer spending on vehicles, thereby impacting Hyundai’s financial performance.
Regulatory challenges: Changes in environmental and safety regulations can impose additional costs on automobile manufacturers. Hyundai must continuously adapt to these changes to remain compliant and competitive.
Currency fluctuations: As a subsidiary of a South Korean company, Hyundai Motor India is exposed to currency risks, particularly related to the import of components and raw materials.
Hyundai Motor India Limited IPO details
The Hyundai Motor India Limited IPO is structured as a 100% Book Built Offer. This means the final price of the shares will be determined through a book-building process, wherein bids are invited from investors. The offer consists of an offer for sale of up to 142,194,700 equity shares by the Promoter Selling Shareholder, Hyundai Motor Company. These shares have a face value of Rs. 10 each, but the final offer price, including the premium, will be decided by the company and its Book Running Lead Managers (BRLMs).Offer structure
The IPO’s offer structure is designed to attract a diverse range of investors. The equity shares being offered are primarily for sale by Hyundai Motor Company, aiming to unlock value and provide liquidity. The book-building process allows institutional and retail investors to participate in determining the final price of the shares, ensuring that the offer is priced competitively and in line with market expectations.Why is Hyundai going public?
Hyundai Motor India Limited’s decision to go public is driven by several strategic factors. By listing on the Indian stock exchanges, Hyundai aims to enhance its brand visibility and establish a direct connection with the capital markets. This move also allows the parent company, Hyundai Motor Company, to monetise its investment and provide an opportunity for Indian investors to participate in the growth story of a leading automobile manufacturer.About Hyundai Motor India Limited
Incorporation: Hyundai Motor India Limited was incorporated in 1996 as a wholly owned subsidiary of Hyundai Motor Company, South Korea.Manufacturing: The company operates a state-of-the-art manufacturing facility in Tamil Nadu, which can produce a wide range of vehicles catering to different segments.
Market presence: Hyundai has established itself as one of the leading automobile manufacturers in India, known for its innovative models and customer-centric approach.
Product portfolio: The company offers a diversified product range, including popular models like the Hyundai Creta, i20, and Verna, which have consistently performed well in the Indian market.
Hyundai Motor India's financial performance
Hyundai Motor India's financial performance over the years has been robust, reflecting its strong market position and operational efficiency. Below is a summary of key financial metrics:| Metric | FY 2023 (₹ Million) | FY 2022 (₹ Million) | FY 2021 (₹ Million) |
| Revenue from Operations | 603,075.80 | 473,784.32 | 409,722.51 |
| - Domestic (in %) | 76.59 | 78.8 | 81.21 |
| - Exports (in %) | 23.41 | 21.2 | 18.79 |
| Profit for the Year | 47,092.50 | 29,015.91 | 18,811.56 |
| EBITDA | 75,487.80 | 54,860.89 | 42,456.61 |
| EBIT | 53,589.14 | 33,165.03 | 22,724.96 |
| Net Worth | 200,548.18 | 168,562.55 | 153,113.43 |
| ROCE | 28.75% | 20.37% | 15.38% |
Terminologies explained:
Revenue from operations: Income generated from the company's core business activities, such as sales of cars in domestic and export markets.
Domestic: Revenue generated from sales within India.
Exports: Revenue generated from sales in international markets.
Profit for the year: The net income after all expenses, taxes, and costs have been deducted.
EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortisation; a measure of a company’s operating profitability.
EBIT: Earnings Before Interest and Taxes; indicates a company's profitability from its core operations.
Net worth: Total assets minus liabilities, representing the equity shareholders hold in the company.
ROCE (Return on Capital Employed): A ratio that indicates the efficiency and profitability of a company’s capital investments.
Strength and risks of Hyundai
Understanding the strengths and risks of Hyundai Motor India Limited is crucial for making an informed investment decision.Strength of Hyundai Motor
Market leadership: Hyundai is a dominant player in the Indian automotive market, with a strong presence across various segments.Innovative technology: The company is known for incorporating advanced technology and innovative features in its vehicles, which enhances its appeal among customers.
Extensive distribution network: Hyundai has a robust distribution network across India, ensuring wide availability and strong after-sales service.
Brand reputation: Hyundai enjoys a strong brand reputation in India, built over decades of delivering quality products and excellent customer service.
Top risks to consider before applying for the Hyundai IPO
Intense competition: The Indian automotive market is highly competitive, with several established players and new entrants vying for market share, which could impact Hyundai’s sales and profitability.Economic sensitivity: The automotive industry is closely tied to economic cycles. Any downturn in the economy could affect consumer spending on vehicles, thereby impacting Hyundai’s financial performance.
Regulatory challenges: Changes in environmental and safety regulations can impose additional costs on automobile manufacturers. Hyundai must continuously adapt to these changes to remain compliant and competitive.
Currency fluctuations: As a subsidiary of a South Korean company, Hyundai Motor India is exposed to currency risks, particularly related to the import of components and raw materials.
