Hyundai Motor India Shares Slump As Trading Begins In Asia’s Biggest IPO Of The Year
by John Kang · ForbesShares of Hyundai Motor India, the Indian arm of South Korean billionaire Euisun Chung’s car maker Hyundai Motor Company, slumped in its highly anticipated stock market debut in India on Tuesday.
The stock fell 34% when trading commenced but recovered to close at 1,819.6 rupees, down 7.16% from its IPO price, on the first day of trading in Mumbai. The company’s IPO was priced at 1,960 rupees a share, at the top end of its marketed range. Shares of parent company Hyundai Motor edged down about 1% in South Korea.
The listing raised 279 billion rupees, or around $3.3 billion, making it the biggest IPO in Asia, and the second-biggest globally so far this year, after cold-storage giant Lineage’s $4.4 billion Nasdaq listing. It’s also the largest IPO ever in India, topping state-owned Life Insurance Corporation of India’s 206 billion rupees offering in 2022. Hyundai India is the first car maker to list in India since Maruti Suzuki in 2003.
Hyundai India did not issue new shares in the IPO. Instead, parent company Hyundai Motor Company sold a 17.5% stake in the Indian operation, hence the IPO proceeds will go to the Korean parent.
Hyundai India reported a 16% rise in revenue for the year ended March 31 to 713 billion rupees, while net profit increased 28.7% from the previous year to 60.6 billion rupees. The car maker sold 614,721 vehicles during that period, up 8.3% from the previous year. Its best-selling models are the Creta (26.5% of sales volume) and Venue (21%) sport-utility vehicles. Another Hyundai-owned unit, Kia India, which is not part of the IPO, has gained traction with SUV models Carens and Sonet to cross sales of one million units in India since entering the Indian market five years ago.
Hyundai India said in the prospectus that it is the second-largest car maker in India by sales after Maruti Suzuki. India’s other major car makers are Tata Motors, part of the Tata conglomerate, and billionaire Anand Mahindra’s Mahindra & Mahindra. The four combined account for approximately 80% of the auto market, according to the prospectus.
The Indian car market is expected to grow at a compound annual growth rate of 4.5% to 6.5% between 2024 and 2029, according to data from Crisil, an S&P ratings firm, cited in Hyundai India’s prospectus. The market is less saturated compared to other large markets, with only 26 cars per 1,000 people, according to Crisil data cited in the prospectus.
“This provides significant headroom for growth, especially given the expected increase in disposable incomes, faster economic growth, younger population, and increased focus from international OEMs,” Hyundai India said in the prospectus
Hyundai India has two factories in Chennai, the capital of India’s southern state of Tamil Nadu, with a total production capacity of 811,000 vehicles a year. Last year, it acquired General Motor’s plant in the western state of Maharashtra.
Hyundai first entered India in 1998 with the Santro hatchback, which made the company a household name in India. The Santro was discontinued in 2022.