June 15th 2024.
Hyundai Motor India Ltd, the Indian arm of South Korean automaker Hyundai, is looking to make a big move in the market. The company has filed preliminary papers with Sebi, the Indian financial regulator, to launch an initial public offering (IPO). If successful, this IPO would be the largest in India, surpassing the recent share-sale of Rs 21,000 crore by LIC (Life Insurance Corporation of India).
The proposed IPO is a unique one as it will be entirely an offer for sale (OFS) of 142,194,700 equity shares by Hyundai Motor Company. This means that there will be no fresh issue of shares, and the company will not receive any proceeds from the IPO. The draft red herring prospectus of the company states that the parent company, Hyundai Motor Company, is looking to raise at least USD 3 billion through this IPO. In order to achieve this, they may dilute their stake in Hyundai Motor India Ltd by 15-20 percent.
This IPO is a significant step for the Indian industry as it will be the first time an automaker has gone public in over two decades. The last time this happened was in 2003 when Maruti Suzuki India made its debut in the stock market. Another recent development in the market is the clearance given by Sebi to Ola Electric, an electric two-wheeler company, to raise funds through an IPO.
In their draft papers, Hyundai Motor India Ltd states that they expect the listing of their equity shares to have a positive impact on their visibility and brand image. It will also provide liquidity and a public market for their shares. The company has been operating in India since 1996 and currently offers 13 models across different segments.
In May 2024, the company reported a 7 percent increase in total sales, with 63,551 units sold compared to 59,601 units in the same month last year. Their domestic dispatch of vehicles to dealers also saw a 1 percent rise, with 49,151 units sold compared to 48,601 units in the previous year. The company's exports also saw a significant growth of 31 percent, with 14,400 units sold compared to 11,000 units in the same period last year.
This IPO is definitely one to watch out for, as it not only marks a milestone for the company but also for the Indian market as a whole. With the automotive industry constantly evolving and growing, this IPO could be a game-changer for Hyundai Motor India Ltd.
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