Hyundai Motor India IPO - Issue Details, Financials, Strengths, Strategies, Risks And More: Anand Rathi

Anand Rathi Report

Hyundai Motor India Ltd. will launch its initial public offering on Oct. 15 and the offer closes for subscription on Oct. 17. The Rs 14.2 crore Ipo comprises of pure offer-for-sale component. The company has fixed the price band in the range of Rs 1,865-1,960 apiece to raise up to Rs 27,870 crore. Bids can be made in the lot size of seven shares or multiples thereof.

Valuation and Outlook

Hero Motor India has consistently held the position as the leading auto OEM in India by sales volume in the mid-size SUV sub-segment from Fiscal Year 2019 through the three months ending on June 30, 2024.

Hero Motor India’s current range of passenger vehicles is designed to appeal to a wide variety of customers, providing options for everyone. Their portfolio consists of 13 models across key passenger vehicle segments by body type, including sedans (Aura and Verna), hatchbacks (Grand i10 NIOS, i20, and i20 N Line), and SUVs (Exter, Venue, Venue N Line, Creta, Creta N Line, Alcazar, Tucson, and IONIQ 5).

Hero Motor India is dedicated to investing in R&D and introducing new passenger vehicles to enhance their market position and increase the appeal of their vehicles to customers. They aim to remain a key player in the Indian automobile market, offering options that cater to buyers across the entire range, from affordable to premium segments. Hero Motor India follows a premiumisation strategy, concentrating on selling higher-end trims with a higher average selling price for their respective passenger vehicles. Hero Motor India aims to align their EV strategy with market demands in India by carefully timing the launch of suitable EV models across various price segments.

At the upper band the company is valuing at 26.2 times its FY24 earnings along with being valued at 26.7 times if we annualize FY25 earnings. Following the issuance of equity shares, the company's market capitalization stands at Rs 15,92,581 million, with a market cap-to-sales ratio of 2.28 based on its FY24 earnings.

We believe that the issue is fully priced and recommend “Subscribe – Long Term” rating to the IPO.

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