Explained | Hyundai Motor India: All you need to know about the largest IPO ever in the Indian stock market

Hyundai Motor India, which is a part of South Korea-based automobile manufacturer Hyundai Motor, made its debut in the Indian stock market on Tuesday.

The company has put up shares worth $3.3 billion (Rs 27,743 crore) for Indian investors in its initial offering, which is the largest of its kind in Dalal Street's history.

This is the first time the company has opened itself to the stock market of any country outside South Korea.

Here is all you need to know:

Record-highest IPO

Executive Chairman of Hyundai and Chief Executive Officer (CEO) Hyundai Motor Group, rings the bell as Ashishkumar Chauhan, Managing Director and Chief Executive Officer of the National Stock Exchange (NSE) of India and Jaehoon Chang, Chief Executive Officer (CEO) and President of Hyundai Motor Company, watch on during the listing ceremony of Hyundai Motor India Limited at NSE, in Mumbai, India, October 22, 2024.

Hyundai India, with its $3.3 billion IPO, has surpassed PSU giant Life Insurance Corporation of India, which had opened up shares worth $2.5 billion (Rs 21,017 crore) when it first got listed in the stock market in 2022.

The IPO, a pure offer for sale, was fixed at Rs 1,865-Rs 1,960 per share.

The price of the share was Rs 1890.85 (down 3.52 per cent) at the time of writing.

On the NSE, the stock made its debut at Rs 1,934, down 1.32 per cent.

The company's market valuation stood at Rs 1,57,807.67 crore during the early trade.

The initial public offer of Hyundai Motor India Ltd got subscribed 2.37 times on the last day of the bidding on Thursday, helped by institutional buyers.

Hyundai Motor India Ltd (HMIL) on Monday raised Rs 8,315 crore from anchor investors.

Concerns about valuation

The Logo of Hyundai Motor India Limited is seen outside a car showroom, in Ahmedabad.

Hyundai India is looking to secure a market valuation of $19 billion (Rs 1.6 lakh crore), two sources with direct knowledge of the matter told Reuters.

That values the company at about 40 per cent of its Korean parent.

The issue prices India's No 2 carmaker at about 26 times earnings, close to 29 times for market leader Maruti Suzuki.

The slim difference in P/E rations, despite the big gap in Indian car market share between Hyundai, at 15 per cent, and Maruti, with 40 per cent, spurred concern about the valuation.

"Hyundai's issue is not priced attractively for retail investors and high net worth individuals," said Arun Kejriwal, founder of Kejriwal Research.

They were unlikely to see any listing-day gains or major earnings growth for the next five quarters until the company's new capacity goes online, he added.

Hyundai's business in India

Workers assemble cars inside the Hyundai Motor India Ltd. plant at Kancheepuram district in Tamil Nadu.

1. Hyundai set up its India operations in 1996, starting with the Santro hatchback, once its most sold car.

2. Hyundai currently has a roughly 15 per cent share of India's car market. It sold 6,14,721 cars in India and exported 1,63,155 in the year to March 2024.

3. Hyundai has one factory outside of Chennai in Tamil Nadu. The factory has a capacity of 8,24,000 vehicles per year and is running at a utilisation rate of 94 per cent, leaving little room for growth that would help compete with Maruti Suzuki.

4. Hyundai aims to reach production of about one million vehicles a year with the acquisition of a former General Motors plant in Pune. The plant is expected to start operations only by the second half of the year to March 2026.

5. Hyundai has 1,377 dealers across India.

6. In India, the carmaker sells 13 models, with the Creta and Venue sport-utility vehicles as well as the Grand i10 Nios hatchback among its most popular.

With PTI, Reuters inputs