Firm Profile:
Hyundai Motor India Ltd is a key participant within the Indian automotive market and operates as a fully-owned subsidiary of South Korea’s Hyundai Motor Firm. Since its institution in 1996, it has grown into one of many nation’s prime automotive producers. The corporate is understood for its innovation, superior know-how, and a variety of automobiles that cater to numerous segments, together with hatchbacks, sedans, SUVs, and electrical vehicles.
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Well-liked fashions from Hyundai’s Indian portfolio embrace the Creta, Venue, Verna, i10, i20, Aura, Tuscon and so forth. These automobiles are appreciated for his or her reliability, trendy options, and robust efficiency, contributing to Hyundai’s repute as one of the crucial trusted manufacturers within the Indian market.
The corporate’s manufacturing facility is situated in Sriperumbudur, Tamil Nadu, which is among the many largest built-in automotive manufacturing crops in India. Outfitted with superior robotics, automation, and eco-friendly practices, this plant ensures that Hyundai produces automobiles of world requirements. Hyundai additionally prioritizes analysis and growth, frequently bringing in new applied sciences to boost each the driving expertise and environmental sustainability.
Hyundai Motor India boasts an intensive gross sales and repair community, with dealerships and repair facilities unfold throughout the nation. It additionally focuses on sustainability by providing electrical and hybrid automobiles, alongside actively pursuing inexperienced initiatives to cut back its carbon footprint.
Promoters & Shareholding:
The promoter of the corporate is Hyundai Motor Firm.
| Particulars | Pre – Concern | Put up – Concern |
| Promoters & Promoters Group | 100% | 82.5% |
Public Concern Particulars:
Supply on the market: OFS of approx. 142,194,700 fairness shares at Rs. 10, aggregating as much as Rs. 27,870.16 Cr.
Complete IPO Dimension: Rs. 27,870.16 Cr.
Worth band: Rs. 1865 – Rs. 1960.
Goal: Augmenting its capital base to fulfill its future capital necessities and for common company functions.
Bid qty: minimal of seven shares (1 lot) for Rs. 13,720 and most of 14 heaps.
Supply interval: Tuesday, October 15, 2024 – Thursday, October 17, 2024.
Date of itemizing: Tuesday, October 22, 2024.
Execs:
- Hyundai Motors India Restricted (HMIL) has held the place of being the second-largest vehicle authentic tools producer (OEM) in India by home gross sales quantity because the 2009 fiscal 12 months.
- Hyundai Motors India Restricted (HMIL) has led the mid-size SUV phase in gross sales from FY19 to June 2024, with the Creta capturing a 38% market share.
- In 2023, Hyundai Motors enhanced its aggressive edge by launching the IONIQ 5 within the premium electrical car market.
- Export gross sales considerably enhance income with increased common promoting costs, providing a pure hedge in opposition to forex fluctuations.
- Hyundai’s management within the aggressive Indian automotive market is strengthened by its scale, intensive seller community, operational effectivity, and robust buyer loyalty.
Dangers:
- Rising costs of key components and supplies might adversely have an effect on enterprise operations and outcomes.
- As of June 30, 2024, the corporate depends on Mobis India Restricted for 17.91% of spare components. Supply failures might disrupt operations, and ties with different HMC Group Corporations could trigger conflicts of curiosity.
- HMIL imports round 20% of its components, primarily engine elements and transmission assemblies, from HMC and its associates. It enjoys lowered customs duties of 0% to fifteen% beneath the Complete Financial Partnership Agreements between Korea and India. Any discount or removing of those concessions or new tariffs might considerably elevate sourcing prices.
- Provide chain disruptions, reminiscent of chip shortages and transport delays, might threaten HMIL’s plant operations and profitability
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Sectorial outlook – The Indian automotive business, notably the passenger car (PV) sector, is ready for continued development, with home gross sales quantity rising at a compound annual development fee (CAGR) of 5% from FY19 to FY24. Regardless of experiencing a contraction of 10% CAGR between FY19 and FY21, the business rebounded strongly in FY23, reporting a 27% year-on-year restoration pushed by pent-up demand, heightened private mobility wants, and improved provide circumstances. This momentum continued into FY24, with a projected development fee of 8% YoY, reaching file gross sales of 4.2 million items. Based on CRISIL Analysis, total PV volumes are anticipated to develop at a CAGR of 4.5-6.5% between FY24 and FY29, probably reaching 5.2-5.7 million items by FY29. This development is supported by rising common car ex-factory costs, which have elevated at a CAGR of 7-9% because of components like client preferences shifting in the direction of mid- and high-end automobiles, the emergence of compact SUVs, and the introduction of superior applied sciences.
Hyundai Motors India Restricted (HMIL) is well-positioned to learn from these optimistic developments within the Indian auto marketplace for a number of causes. The SUV phase has seen exceptional development, increasing at a CAGR of 23%, considerably outpacing the general business development fee of 5%. With HMIL’s sturdy SUV choices, such because the Creta and Venue, the corporate is ready to seize a bigger share of this profitable market. Moreover, HMIL has a sturdy vary of automobiles throughout key classes, together with hatchbacks, sedans, and SUVs, permitting the corporate to cater to various client preferences, notably as demand shifts in the direction of bigger automobiles with enhanced options. Moreover, India’s automotive penetration stays low at roughly 26 vehicles per 1,000 individuals, in comparison with a lot increased figures in markets like China, the US, and Europe. This presents vital development potential for HMIL as rising per capita revenue drives extra customers to buy automobiles. Lastly, the wholesome restoration within the PV business and the continued demand for private mobility place HMIL to leverage these favorable market circumstances, enhancing its market share and profitability within the increasing Indian automotive panorama.
The financials (income and web revenue) are proven within the graph beneath:
Valuation – For the final 3 years common EPS is Rs. 56.3 and the P/E is round 34.8x on the higher value band of Rs. 1960. EPS for FY24 is Rs. 75 so on the higher band value the present P/E is round 26x. It has Maruti Suzuki India Ltd (MSIL) (27x), Tata Motors (10x) and Mahindra & Mahindra (M&M) (35x)as listed friends as per the RHP. The corporate’s P/E is between 26x and 35x. Income and margins has been rising persistently.
Advice – We advise a “Purchase on Dips” strategy following Hyundai Motors India’s itemizing because of a number of key issues. The gray market premium (GMP) for its shares has sharply declined to round ₹45, reflecting solely a modest 3% premium over the problem value. It is a vital drop of over 89% from its earlier excessive of ₹570, suggesting dampened investor enthusiasm because the IPO nears.
The IPO, which is a proposal on the market (OFS), includes the sale of 14.2 crore shares by Hyundai’s Korean mum or dad. Because of this, the Indian operations is not going to obtain any of the funds raised, elevating questions in regards to the quick advantages of the itemizing for Hyundai Motors India. This construction has led to doubts in regards to the development prospects and long-term worth of the IPO.
Moreover, Hyundai’s ₹27,870 crore IPO presents restricted attraction when in comparison with Maruti Suzuki, which dominates the market with 3 times the passenger car share, 2.5 instances the gross sales quantity, and comparable profitability. At ₹1,960, the higher finish of the IPO value band, we consider the valuation is steep, particularly given Maruti’s stronger market place and scale.
In abstract, whereas Hyundai Motors India is a well-established participant with a powerful model and product providing, the present pricing doesn’t present quick worth for buyers. We suggest ready for potential post-listing value corrections, making it extra engaging to Purchase on Dips and seize long-term development at a extra favorable valuation.
Disclaimer:
This text shouldn’t be construed as funding recommendation, please seek the advice of your Funding Adviser earlier than making any sound funding determination.
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