Hyundai Motor India Ltd. (HMIL) is expected to file draft papers for its initial public offering with the market regulator by Friday evening, marking the beginning of what could be the largest share sale in the country’s history, according to a banker familiar with the plan.
It is reported in April that the Indian subsidiary of South Korean carmaker Hyundai Motor Company would submit a draft red herring prospectus for its $3-3.5 billion IPO in June, aiming to complete its market listing before Diwali. However, initial feedback from bankers suggests the IPO could be closer to $2.5-3 billion. The draft prospectus will provide potential investors with details on the company’s growth strategy, including product development and market expansion.
The largest IPO in India to date was Life Insurance Corporation of India’s ₹20,557 crore ($2.46 billion) offering in May 2022.
HMIL, India’s second-largest carmaker after Maruti Suzuki, invited analysts to its manufacturing facility in Chennai last month to initiate its IPO process.
At a time when rival Tata Motors is projecting a market share increase of up to 6% by 2030, aiming for 20% of all passenger vehicle sales by the end of the decade, investors and analysts will be assessing HMIL’s market position. Over 60% of HMIL’s sales come from sports utility vehicles (SUVs).
HMIL’s IPO represents a significant milestone as it aims to list alongside established automotive giants in one of the world’s fastest-growing automotive markets. This move will also allow the company to enhance its market value in line with the South Korean government’s ‘corporate value-up’ programme, which encourages companies to pursue foreign listings to boost valuations and return more cash to shareholders.
“Listing its India subsidiary in the country indicates a significant potential for value-realization from the world’s third-largest passenger vehicle market, which has not yet been fully reflected in Hyundai’s overall market valuation,” said an industry executive, who wished to remain anonymous. “The India listing is projected to allow a reevaluation of the company’s remaining operations and India’s weight in the business, potentially increasing Hyundai’s overall market capitalization.”
While Hyundai is well-funded at the parent level, the India IPO aims to generate additional capital to enhance shareholder returns through dividends and share buybacks.
Hyundai’s India listing underscores its commitment to expanding operations in the country, including establishing a battery assembly factory and increasing production capacity through its acquisition of the General Motors factory in Talegaon, Pune. This move sets a precedent for other Korean companies looking to expand their investor base and improve valuations through international listings.
Passenger vehicle makers in India attract high valuations due to the growing demand for premium models. Listed Indian auto companies include Maruti Suzuki India (market capitalization of over ₹4 trillion), Tata Motors (₹3.3 trillion), and Mahindra & Mahindra (₹3.6 trillion).
Hyundai Motor India has capitalized on this consumer preference with utility vehicles such as Creta, Venue, and Exter, which accounted for about 60% of its total domestic sales in FY24.
