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Hyundai Motor India IPO review: Worth investing? Brokerages’ recommendation
Source: Business Standard
Hyundai (Photo: Shutterstock)
The analysts broadly remain optimistic about the public issue of the Indian arm of the South Korean carmaker, citing the valuation that appears at a discount to the industry leader, Maruti Suzuki India.
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The Hyundai Motor India IPO, which opens for public subscription tomorrow, Tuesday, October 15, 2024, comprises an entire offer for sale of 142,194,700 shares with a face value of Rs 10 apiece. The public issue will be available at a price band of Rs 1,865-1,960, with a lot size of 7 shares. Thus, a retail investor can bid for a minimum of one lot or 7 shares of the Hyundai Motor India IPO, with a minimum investment requirement of Rs 13,720.
Meanwhile, the unlisted shares of the Indian arm of the South Korean carmaker are trading at a premium of Rs 65 against the upper end of the IPO price of Rs 1,960, which translates to a GMP of 3.32 per cent. However, today’s GMP is less than half of the Rs 147 recorded on October 9, when the company announced its price band, according to sources tracking grey market details.
That said, if you’re wondering whether you should subscribe to the Hyundai Motor IPO, here’s what brokerages recommend:
ICICI Direct – Subscribe
Analysts at ICICI Direct remain bullish on the Hyundai Motor India IPO and have recommended that investors subscribe to the public issue, citing steady growth prospects amid industry tailwinds, robust financials, and a healthy SUV product slate. At the upper end of the price band, HMIL will command a valuation of 26x P/E, 16.5x EV/EBITDA, and 2.3x P/S on an FY24 basis, which is at a slight discount to the industry leader, Maruti Suzuki India.
Analysts expect limited listing gains from this IPO but anticipate healthy double-digit portfolio returns over the medium to long term.
KRChoksey Research – Subscribe
The company has reported ROE and ROCE of 57 per cent and 63 per cent, respectively, higher than its peers. According to the brokerage, the IPO is reasonably valued at a PE multiple of 26x based on its FY24 adjusted EPS.
Arihant Capital – Subscribe for the long term
Analysts at Arihant Capital are also bullish on the public issue of Hyundai Motor India and recommend investors subscribe for the long term. They highlighted that Hyundai has maintained a stable market share in India historically. With R&D from Korea and an automated factory in Chennai, the company has optimised its operations while expanding distribution.
According to the analysts, Hyundai also plans to gradually become a major player in the EV segment. The company has recorded one of the highest RoNW among its peers and is well-positioned to take advantage of the growing PV market in India.
Anand Rathi Research – Subscribe for the long term
Anand Rathi Research has recommended the investors subscribe to Hyundai Motor India IPO from a long-term perspective. At the upper price band, the company is valued at 26.2x FY24 earnings and 26.7x if FY25 earnings are annualised. The analysts believe the issue is fully priced but recommend a ‘Subscribe – Long Term’ rating.
IDBI Capital – Subscribe
IDBI Capital has assigned a ‘subscribe’ rating to the Hyundai Motor India IPO. The brokerage is bullish on Hyundai India due to its SUV-focused portfolio and adaptability to changing consumer preferences. HMIL’s strong parentage and cutting-edge manufacturing technology will help it stay ahead in the domestic market.
SBI Securities – Subscribe
Analysts at SBI Securities remain optimistic about the Hyundai Motor India IPO, recommending subscription for the long-term. HMIL’s strong brands, popular models, advanced technology, and export potential position it well for future growth.
Aditya Birla Capital – Subscribe for the long term
Aditya Birla Capital has also assigned a ‘subscribe’ rating for the long term, citing Hyundai’s strong parentage, leveraging of R&D capabilities, and its robust balance sheet.
LKP Securities – Subscribe for the long term
About Hyundai Motors India
Hyundai Motors India (HMIL), is a part of South Korea based the Hyundai Motor Group, which is the third largest passenger vehicle (PV-OEM) manufacturer globally as of CY23. HMIL has for long been the second largest auto OEM in the domestic passenger vehicle market in terms of sales volumes. HMIL is amongst the top three contributors to Hyundai Motor global sales volumes, with contribution rising from 15.5 per cent in CY18 to 18.2 per cent in CY23. HMIL’s portfolio includes 13 models across major passenger vehicle segments including Grand i10, Aura, Verna, Exter, Venue, and Creta etc.
First Published: Oct 14 2024 | 12:34 PM IST
