Hyundai Motor India IPO Set to Open on October 15: Key Details on Price Band, GMP, and More

Hyundai Motor India, the second-largest original equipment manufacturer (OEM) and a major exporter of passenger vehicles, is set to launch its much-anticipated initial public offering (IPO) on October 15, 2024. The IPO, expected to raise nearly ₹27,870 crore, is attracting attention due to the company’s strong market position and the overall buoyancy in Indian stock markets. If you’re considering investing, here are the ten essential things you should know about this IPO before making a decision.

1. Price Band and Lot Size

The price band for the Hyundai Motor India IPO has been set between ₹1,865 and ₹1,960 per equity share. Investors can bid for a minimum lot size of seven shares, and bids can be placed in multiples of seven shares thereafter. The pricing reflects the company’s significant market position, and it will determine how much capital the company can raise from investors.

2. Grey Market Premium (GMP)

As of now, market observers indicate a grey market premium (GMP) of ₹147 for Hyundai Motor India in the unlisted market. This implies a premium of approximately 7.5% over the issue price. While the GMP provides an indication of market sentiment ahead of the IPO, it’s important to remember that it is not always a reliable predictor of future price movements post-listing.

3. Offer-for-Sale (OFS) Structure

The entire IPO will be conducted as an offer-for-sale (OFS) by the promoter Hyundai Motor Company, which will offload 14.2 crore equity shares. There is no fresh issue component in this IPO, meaning that the company will not be raising new capital but instead offering a portion of existing shares to the public. This setup allows Hyundai Motor Company to monetize a portion of its holdings while maintaining a substantial shareholding in the Indian subsidiary.

4. Timeline of the IPO

The IPO will open for anchor investors for a single day on October 14, followed by the main public offer, which opens on October 15 and closes on October 17. Investors will have a three-day window to subscribe to the offer. Given the size and significance of this IPO, it is expected to draw significant interest from both institutional and retail investors.

5. Reservation for Different Investor Categories

The IPO has been structured to cater to different classes of investors. Institutional Investors (Qualified Institutional Buyers or QIBs) will be allocated 50% of the offer. Non-institutional investors (NIIs) will have access to 15% of the issue, while 35% of the shares are reserved for retail investors. This distribution reflects the company’s efforts to balance participation from large institutional investors and smaller retail participants.

6. Hyundai’s Market Position in India

Hyundai Motor India is a dominant player in the Indian automobile market, holding a domestic market share of 14.6%. The company is also the second-largest exporter of passenger vehicles from India, making it a significant player in both domestic and international markets. This strong position makes Hyundai a compelling candidate for investors looking to gain exposure to the Indian automotive sector.

7. Sales Performance

For September 2024, Hyundai reported domestic sales of 64,201 units, reflecting a year-on-year decline of 10%. For the year 2024 so far, the company has sold 5.77 lakh units, which is flat compared to the previous year. While the decline in September sales may raise some concerns, the company’s overall performance, combined with its market leadership, continues to make it an attractive investment option.

8. Historical Context: First Auto IPO in Two Decades

Hyundai Motor India’s IPO marks the first public offering by a car manufacturer in India in two decades. The last IPO from the automotive sector was Maruti Suzuki in 2003. This offering comes at a time when the Indian stock markets have been touching record highs, and the IPO market has seen a flurry of activity with several companies making strong market debuts.

9. Merchant Bankers and Registrars

Several leading financial institutions are managing the Hyundai Motor India IPO. Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities and Capital Markets (India), JP Morgan India, and Morgan Stanley India Company are serving as the merchant bankers. KFin Technologies has been appointed as the registrar, responsible for handling the allotment process and other investor services during the IPO.

10. Allotment and Listing Dates

Hyundai Motor India is expected to finalize the basis of allotment for its IPO shares by October 18, 2024. The equity shares will be credited to the demat accounts of successful investors by October 21. Trading of Hyundai Motor India’s shares is set to begin on October 22, 2024, on both the BSE and NSE. This timeline is crucial for investors looking to participate in the listing-day price action, which is often marked by heightened volatility and significant price movement.

Conclusion: Key Considerations for Investors

Hyundai Motor India’s IPO is set to be a landmark event in the Indian stock markets, given the company’s size, market share, and timing. Investors should carefully consider the pricing, market conditions, and the company’s financial health before making a decision. The offer-for-sale nature of the IPO means that investors are buying existing shares from the promoter, not contributing new capital to the business.

With strong fundamentals, a solid market position, and the backing of prominent financial institutions, Hyundai Motor India’s IPO could be an attractive opportunity for both retail and institutional investors. However, it’s essential to assess potential risks such as fluctuating sales figures and broader market conditions before subscribing to the offer.