Hyundai Motor India Limited (HMIL) is gearing up for a significant IPO with a size of Rs. 27,870.16 crore. This will be an offer-for-sale issue, opening on October 15, 2024, and closing on October 17, 2024, with a listing scheduled for October 22, 2024. The company’s leadership in the Indian automotive industry, backed by robust financials, has made this IPO highly anticipated. In this article, we will review the key aspects of the Hyundai Motor India Limited IPO and provide an analysis of its strengths and weaknesses.

Company Overview

Founded on May 6, 1996, Hyundai Motor India Limited (HMIL) is a subsidiary of the South Korean automotive giant Hyundai Motor Company. The company’s headquarters are located in Gurugram, Haryana. Over the years, Hyundai has become the second-largest passenger vehicle manufacturer in India, a position it has held since 2009. It operates two manufacturing plants in Chennai and recently acquired a new facility in Talegaon to further boost capacity. Hyundai has sold over 12 million vehicles in the domestic and export markets as of June 2024.

Hyundai Motor India’s Market Presence

Hyundai’s presence in the Indian automotive sector is bolstered by its broad product portfolio, which includes popular models like the Venue, Creta, and i20. With a market share of 14-17% in passenger vehicle sales, Hyundai has also ventured into the electric vehicle (EV) segment with models such as the Kona and Ioniq 5. This diversified offering positions the company as a key player in India's rapidly evolving automotive landscape.

Hyundai exports vehicles to over 190 countries, including key markets in Europe, Africa, and Asia. The company has a vast sales network with 1,377 sales points and 1,561 service points across India, contributing to its strong domestic presence.

Industry Landscape and Growth Projections

The Indian automotive industry plays a crucial role in the national economy, accounting for 7.1% of the country's GDP. The industry produced 28.43 million vehicles in FY24, making India the third-largest automotive market globally. Projections indicate that by 2029, the industry's value could reach $187.85 billion, growing at a robust CAGR of 8.20%.

Within this broader industry, the passenger vehicle market is expected to grow from $39.82 billion in 2024 to $54.76 billion by 2030, reflecting a CAGR of 5.45%. The Indian government’s push for 30% electric vehicle sales by 2030 opens new opportunities for players like Hyundai, who are actively investing in sustainable mobility solutions.

Financial Performance

Hyundai Motor India Limited’s financial performance has been solid, with revenue increasing from Rs. 60,307.58 crore in FY23 to Rs. 69,829.06 crore in FY24, representing a growth of 15.79%. In the first quarter of FY25, the company reported revenue of Rs. 17,344.23 crore. Over the past two years, the company’s revenue has grown at a CAGR of 21.40%, demonstrating consistent financial strength.

Source : Company RHP

In FY24, 77.66% of Hyundai’s revenue came from India, with the rest divided between Africa (3.53%), Latin America (6.66%), and the Middle East and Europe (11.21%). Vehicle sales contributed 85.98% of revenue, while parts (6.18%), services (6.07%), and other operating income (1.77%) made up the rest.

Listed Peers of the Company

Strengths

1. Strong Market Position: Hyundai has been the second-largest passenger vehicle manufacturer in India since FY09, consistently maintaining a strong presence.

2. Diverse Product Portfolio: The company offers a wide range of models across various segments, including hatchbacks, sedans, SUVs, and electric vehicles, catering to a broad consumer base.

3. Technological Innovation: Hyundai has introduced cutting-edge technology such as Bluelink (connected car features), ensuring enhanced customer experience.

4. Global Export Reach: With exports to over 190 countries, Hyundai plays a key role in India’s automotive exports, showcasing its global appeal.

5. Robust Manufacturing Capacity: Hyundai’s Chennai plant has an annual production capacity of 8,24,000 units, which supports high-scale manufacturing.

6. Brand Value: Hyundai consistently ranks among the top 32 most valuable global brands.

7. Extensive Sales Network: With 1,377 sales outlets and 1,561 service points, Hyundai has one of the strongest dealership networks in India.

Weakness

1. High Dependence on Domestic Market: Hyundai’s reliance on India for 77.66% of its revenue exposes the company to risks from domestic economic fluctuations or regulatory changes.

2. Limited EV Portfolio: Hyundai’s EV lineup in India is limited to premium models like the Ioniq 5, missing out on the more affordable EV segments that are gaining traction.

3. Cybersecurity Concerns: Recent data breaches have raised questions about the company’s cybersecurity measures.

4. Over-reliance on SUVs: While SUVs are currently popular, a shift in consumer preferences could pose a challenge.

5. Decline in Sedan Market Share: Although Hyundai offers a diverse range of vehicles, its sedan market share has declined as consumer interest shifts toward SUVs.

6. Limited Luxury Offerings: Hyundai’s focus on the mass market limits its appeal among luxury car buyers who prefer brands like BMW or Audi.

IPO Key Details

• IPO Size: Rs 27,870.16 crore

• Offer for Sale (OFS): Rs 27,870.16 crore

• Price Band: Rs 1,865 to Rs 1,960 per share

• Opening Date: October 15, 2024

• Closing Date: October 17, 2024

• Listing Date: October 22, 2024

• Minimum Lot Size: 7 Shares

Conclusion

Hyundai Motor India Limited is poised for a successful IPO backed by a strong market presence, innovative products, and robust financial performance. As the company strengthens its foothold in India and explores opportunities in the growing electric vehicle segment, it is well-positioned to capture future growth. Investors will be watching closely as Hyundai moves forward with this landmark IPO, which could further elevate the company’s stature in both the domestic and global automotive markets.

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