Hyundai India files DRHP for IPO: Plans to dilute up to 17.5% stake

India’s second largest car maker Hyundai Motor India Ltd has filed a draft red herring prospectus (DRHP) for its much-awaited initial public offering (IPO). The South Korean parent company Hyundai Motor Company plans to dilute up to 17.5% stake in its wholly-owned India unit through the IPO, which only has an ‘offer-for-sale’ component.

This will be the first IPO by an Indian carmaker in more than two decades since Maruti Suzuki India was listed in 2003. The automaker will not issue any fresh shares in this offering.

Hyundai Motor Co will sell up to 14,21,94,700 (142.19 million) of its total 81,25,41,100 (812.54 million) equity shares of Rs 10 face value, according to the DRHP filed with the market regulator SEBI.

Up to half of the shares will be offered to Qualified Institutional Buyers, while 15% will be set aside for non-institutional buyers, and up to 35% for retail buyers. The shares will be listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

India, the third largest passenger vehicle market in the world, is the third largest market for the South Korean company and accounts for around 14% of its global sales.

Hyundai entered India in 1996 and introduced its first car, Santro, in 1998. It has invested around Rs 29,741 crore in India as of December end in tangible fixed assets and capital work in progress since inception. The company has cumulatively sold nearly 12 million passenger vehicles in India and through exports.

In 2023-24, Hyundai India sold 6,14,721 vehicles in the domestic market, representing a growth of 8% on a year-on-year basis. It has around 15% market share in the Indian passenger vehicle market. Hyundai India's exports also rose 6.7% to 1,63,155 vehicles during the year.

Recently, Hyundai committed an investment of around Rs 33,000 crore in India and has set itself a target of creating a capacity of around 10,00,000 (1 million) vehicles by the end of the decade.

The carmaker has a manufacturing plant in Sriperumbudur, Chennai, which has a production capacity of 8,24,000 units. It is expanding its manufacturing capacity with the recent acquisition of General Motors' plant in Talegaon, Maharashtra. Once the Talegaon plant is fully operational, Hyundai India's total capacity will be at 10,74,000 (1.07 million) units.

Hyundai India currently has a portfolio of 13 passenger vehicles across sedans, hatchbacks, SUVs and electric vehicles. It has introduced two electric cars — Kona and Ioniq 5 — in India and is yet to launch a mass electric car. The company is expected to launch the electric variant of Creta in early 2025.

While the company's priority is electric vehicles, Autocar Professional has exclusively reported that it is also planning to enter the hybrid segment in a couple of years amid growing consumer acceptance of the technology.

Hyundai Group's subsidiary Kia has already said that it is actively considering to bring hybrid technology to India that could replace diesel.

Hyundai is also considering to launch its premium, luxury brand Genesis in India, most likely by late 2025.

Kotak Mahindra, Citi Group, HSBC Securities, JP Morgan and Morgan Stanley are the lead book-running managers for the IPO. Market regulator SEBI is likely to approve the DRHP for listing in two or three months, and Hyundai India could be looking to list its shares by September-October of this year.

Recently, India’s top electric two-wheeler maker, Ola Electric Mobility Ltd, filed papers for an IPO. The company plans to raise Rs 5,500 crore by issuing new shares, while its existing investors, including founder Bhavish Aggarwal, will sell 9,51,91,195 shares. ENDS