Hyundai IPO: 3 Strong Reasons Despite Weak Start

Aakhir Tak – In Shorts

Hyundai Motor India’s IPO opened to raise ₹27,856 crore but saw a lower-than-expected 89% subscription rate.
Strong market position and future product development plans make Hyundai attractive for long-term investment.
Hyundai’s production capacity expansion and high return on invested capital (RoIC) highlight its financial strength.

Aakhir Tak – In Depth

Hyundai Motor India’s IPO, which opened for bidding on October 15, 2024, aims to raise ₹27,856 crore. Despite the initial buzz, the IPO has underperformed, reaching only 89% subscription as of the final day. While qualified institutional buyers (QIBs) fully subscribed, the response from high-net-worth individuals (HNIs) and retail investors was lower than anticipated. Furthermore, the grey market premium (GMP) dipped to ₹14, indicating a minimal expected listing gain.

Hyundai’s Strong Market Position in India

Hyundai Motor India (HMI) is the second-largest player in India’s passenger vehicle (PV) market, holding a 15% share. In the high-growth utility vehicle (UV) segment, Hyundai dominates with a 63% share of its domestic sales. Additionally, the company plans to introduce more electric vehicles (EVs) to its Indian portfolio, further driving growth in this segment.

Capacity Expansion to Fuel Growth

Hyundai’s acquisition of General Motors’ Talegaon plant will add 0.17 million units to its production capacity by mid-2026. With this, Hyundai’s total capacity will increase to 1.07 million units, bolstering both domestic sales and exports.

Higher Return on Invested Capital

Hyundai boasts a return on invested capital (RoIC) of 177%, far surpassing Maruti Suzuki’s 71%. Efficient utilization of its manufacturing plants and localization efforts contribute to this high return, which positions the company for sustained profitability.

Expert Opinions

Nuvama Wealth Management highlights Hyundai’s strong domestic market position and its growth potential in the UV and EV segments. Choice Equity Broking recommends subscribing for the long term, citing Hyundai’s consistent growth and dividend payouts, making it a reliable option for patient investors.