All About India's Biggest IPO- Hyundai IPO
India is going to have its biggest IPO pretty soon. Hyundai Motor India has secured Security and Exchange Board of India (SEBI) approval for its $3 billion IPO, which values the company at around $20 billion. The previous biggest IPO that the Indian market saw was LIC's $2.7 billion IPO. Apart from being the biggest IPO, it would also be the first car manufacturer to get listed in India in two decades, following Maruti Suzuki's IPO in 2003. Let us look at the company and the IPO details.
All about Hyundai Motors India
Hyundai Motors India is a part of the Hyundai Motor Group, the third largest auto original equipment manufacturer (OEM) in the world based on passenger vehicle sales in CY23. They have been the second-largest auto OEM in the Indian passenger vehicles market since FY09 (in terms of domestic sales volumes).
The company has a track record of manufacturing and selling four-wheeler passenger vehicles that are reliable, feature-rich, innovative, and backed by the latest technology. This is demonstrated in their portfolio of 13 models across multiple passenger vehicle segments by body type such as sedans, hatchbacks, sports-utility vehicles (SUVs), and battery electric vehicles (EVs). They also manufacture parts, such as transmissions and engines.
They have also been India’s largest exporter of passenger vehicles from FY05 to the first 11 months of FY24, having exported the highest cumulative number of passenger vehicles for the same period. Since 1998 and up to March 31, 2024, they have cumulatively sold nearly 12 million passenger vehicles in India and through exports.
Financials of Hyundai Motors
Below are financial numbers of Hyundai Motors:
- For FY21, FY22, and FY23, the company reported a revenue of Rs 40,972.25 crore, Rs 47,378.43 crore, and Rs 60,307.58 crore, respectively. The revenue reported a strong double-digit growth.
- Hyundai Motors reported EBITDA of Rs 4,245.66 crore, Rs 5,486.09 crore, and Rs 7,548.78 crore for FY21, FY22, and FY23, respectively. The EBITDA margin for the same period was 10.36%, 11.58%, and 12.52%, respectively.
- The company reported a profit of Rs 1881.16 crore, Rs 2901.59 crore, and Rs 4709.25 crore for FY21, FY22, and FY23, respectively. The profit has more than doubled in this period. The profit margins have improved from 4.54% in FY21 to 7.67% in FY23.
- The Return on Capital Employed for last three financial years was 15.38%, 20.37%, and 28.75%, respectively.
| Particulars |
9MFY24 |
FY23 |
FY22 |
FY21 |
|
Revenue (Crore)
|
52,157.91
|
60,307.58
|
47,378.58
|
40,972.25
|
|
Domestic
(% of revenue from operations)
|
76.34%
|
76.59%
|
78.80%
|
81.21%
|
|
Exports
(% of revenue from operations)
|
23.66%
|
23.41%
|
21.20%
|
18.79%
|
|
Revenue growth (YoY%)
|
*
|
27.29%
|
15.64%
|
*
|
|
Profit (Crore)
|
4,382.87
|
4,709.25
|
2,901.59
|
1,881.16
|
|
Profit Margin
|
8.22%
|
7.67%
|
6.05%
|
4.54%
|
|
EBITDA (Crore)
|
6,610.77
|
7,548.78
|
5,486.09
|
4,245.66
|
|
EBITDA Margin
|
12.67%
|
12.52%
|
11.58%
|
10.36%
|
|
ROCE (%)
|
27.19%
|
28.75%
|
20.37%
|
15.38%
|
Area of service of Hyundai Motors
Below are different things the company does:
- Press Shop: A computer-controlled line that converts sheet metal to body panels with high dimensional accuracy and consistency.
- Body Shop: It is a hi-tech line that builds full body shells from panels.
- Automated robotic arms are used for intricate welding operations that ensure superior and consistent build quality.
- Paint Shop: It is one of the most modern paint shops in the country and uses the environment friendly water-based process for superior and lasting exteriors. A unique process management system followed here helps us deliver the most extensive colour range, independent of minimum batch requirements, helping customers get their preferred colour anytime.
- Assembly Shop: In Assembly Shop all the engine and suspension parts, the electrical parts, the under-body parts etc are fitted into the car. The cars go through complete testing in the Assembly Shop. The Assembly Shop comprises the Trim Line, the Chassis Line, the Final Line and the OK Line.
- Engine & Transmission Shop: One of the biggest engine shops in the country, this unit is equipped with the most modern tooling and testing facilities to make a wide range of engines in-house.
SWOT analysis of Hyundai Motors
Below is a SWOT Analysis of Hyundai Motors
| Strenghts |
Weaknesses |
|
Second largest auto OEM in India and the largest exporter of passenger vehicles
|
Increases in the prices of parts and materials required for operations
|
|
Diverse portfolio of passenger vehicles across powertrains and major passenger vehicle segments
|
Depend on a limited number of suppliers for parts and materials
|
|
Pan-India sales, distribution and after-sale services network offered by their dealers
|
Global operations involve challenges and risks that could increase their costs
|
| Opportunities |
Threats |
|
Leveraging deep understanding of consumer preferences to successfully expand passenger vehicle portfolio
|
Hyundai faces intense competition from other domestic and international car manufacturers
|
|
Focus on continued premiumisation of passenger vehicle portfolio
|
Changes in government policies or regulations could affect the profitability of the automotive industry
|
|
Focus on increasing EV market share
|
Rapid advancements in technology, such as autonomous vehicles, could disrupt the traditional automotive industry
|
All about Hyundai Motors IPO
The IPO is expected to hit the market at the end of 2024 or early next year. Currently, the listing would be purely Offer for Sale (OFS). The company said, "The objects of the offer are to carry out the Offer for Sale of up to 142,194,700 Equity Shares of the face value of Rs 10 each by the Promoter Selling Shareholder and to achieve the benefits of listing the Equity Shares on the Stock Exchanges".
The company expects that listing the Equity Shares will enhance our visibility and brand image and provide liquidity and a public market for the Equity Shares in India.
Conclusion
No doubt Hyundai Motors is an excellent company and investors should look forward to its IPO. However, investors should also check the valuations at which the IPO will launch. As per the data available, the company is seeking a premium valuation compared to its listed peers - Maruti Suzuki and Mahindra and Mahindra.
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