By: HT Auto Desk , updated on: September 25, 2024, 08:34 am
Hyundai's IPO is expected to be the biggest IPO ever in India.
Hyundai started its innings in India in 1996 with the Santro.
File photo of the Hyundai logo. Image used for representational purpose. (Reuters)
Hyundai Motor India has received approval from the Securities and Exchange Board of India (SEBI) for a $3 billion initial public offering (IPO) and is all set for a launch in October. All eyes are on what could be India’s biggest IPO ever, possibly surpassing Life India Insurance’s (LIC) $2.7 billion listing in 2022.
Hyundai Motor India had filed a draft red herring prospectus (DRHP) with SEBI in the month of June, targeting a valuation of around $18 billion to $20 billion. “The offer is an offer for sale of up to 142,194,700 equity shares of face value Rs. “The sale of 10 per cent of equity shares by the promoter selling shareholder each will be done and the benefits of listing of equity shares will be received on the stock exchanges. Further, our Company expects that the listing of equity shares will enhance our visibility and brand image and will provide liquidity and public market for equity shares in India,” DHRP said.
According to a Hindustan Times report, Hyundai Motor India is being advised by Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital and Morgan Stanley. Law firm Shardul Amarchand Mangaldas is the counsel for the company.
A look at the journey of Hyundai India
Hyundai Motor India Limited or HMIL is a wholly owned subsidiary of Hyundai Motor Company of South Korea. HMIL was established in 1996 at a time when only a few companies were present in the Indian car market – Maruti Suzuki, Hindustan, Premier, Tata Motors and Mahindra.
Despite being relatively unknown in a very small market at the time, HMIL gained a strong foothold by setting up a factory in Tamil Nadu and targeting the small car segment, rolling out the Santro, launched in September 1998. The success of this model was such that it established HMIL as the second largest car manufacturer in the country.
Over the years, Hyundai has become the country's largest car exporter and has diversified its portfolio for the domestic market. So even though cars like the Santro, i10 and Xcent are no longer available, the focus is on SUVs.
The company's current portfolio in India ranges from the Grand i10 NIOS, Aura sedan and i20 hatchback to the Alcazar, Tucson and the all-electric Ioniq 5. However, the Hyundai Creta is the company's best-selling model and dominates the mid-size SUV space. First launched in 2015, the Creta has over 1.1 million units on Indian roads.
Find out about upcoming cars in India, electric vehicles, upcoming bikes in India and cutting-edge technology that is changing the automotive landscape.
First Publication Date: September 25, 2024, 08:34 AM IST
The rollout of SUVs will begin early next year with the first India-made electric vehicle and at least two gasoline-powered models ready for market from 2026, three sources with knowledge of the company's plans said.
Hyundai's first listing outside South Korea, as well as its strategy to add higher-margin offerings, signal its positive outlook toward the world's third-largest car market, as its presence in China is shrinking and domestic sales are declining.
Also read: Hyundai targets 30 per cent sales growth by 2030, doubles hybrid car lineup
Hyundai's sales in India trail only Maruti Suzuki, though in a fast-changing competitive landscape, homegrown giants Tata Motors and Mahindra & Mahindra have dented its market share with new SUVs that are now the top-selling vehicles, replacing the once-favourite small cars.
This has pulled down Hyundai's Indian market share to 14.6 per cent from 17.5 per cent four years ago, while Tata's share has nearly tripled to 14 per cent in the same period. Toyota, the next-largest foreign rival, has seen its share rise from four per cent to six per cent.
“Hyundai is in a difficult position,” said VG Ramakrishnan, managing partner at consultancy Avantiam. “Its primary focus should be on how to maintain its market share and the only way to do that is by introducing products rapidly.”
Hyundai did not respond to requests for comment on its plans in India.
'Lively Market'
India is the third-largest revenue-generating country for Hyundai after the US and South Korea, and the company has already invested $5 billion in the country, with a commitment to invest another $4 billion over the next decade.
“We are proud to consistently achieve the second largest market share in this vibrant market and will continue to lead Hyundai as a premium brand,” Hyundai Motor Group Executive Chairman Euisun Chung said during his visit to India in April.
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Hyundai's launch of an India-made electric SUV in 2025 will be followed by the introduction of four more EVs by the end of the decade as it evaluates plans to make the country a regional EV export hub, three sources not authorised to speak to the media said.
Hyundai on Wednesday announced it will launch hybrid cars in India as part of a broader strategy to increase global sales to 30 percent by 2030, boosting its plan to sell higher-priced vehicles in the country to boost margins.
Its share of cars priced at least $18,000 – considered upmarket in India – is set to double to 15 per cent between 2021 and 2023, according to its draft IPO filed in June.
Hyundai, which plans to sell its 17.5 per cent stake in the Indian business to the public, said it will continue its “premiumisation” strategy that has helped it post the highest profit margins among peers in India, but the gains have come at the cost of volumes.
Also Read: Hyundai Creta EV 2025 to be unveiled at India Mobility Expo – Key Facts
Ramakrishnan said the auto maker will have to maintain a good balance between market share and margins after its listing.
“If any of these deteriorates, shareholders may question the company,” he said.
Hyundai's sales in India were at an all-time high last fiscal year, despite its market share declining.
intense competition
Hyundai Motor had initial success in the Indian market due to affordable hatchbacks like the Santro, while the i10 and i20 models also continue to enjoy similar success.
Hyundai entered India in 1996 and its initial success in the country, which has been a graveyard for automakers such as Ford and General Motors, was due to affordable hatchbacks such as the Santro, which has now been discontinued.
As customer preferences changed, Hyundai launched its first locally produced SUV in 2015. The mid-sized Creta, priced between $13,000 and $24,000, was an instant success and became Hyundai's biggest grossing car.
Hyundai's 13-car portfolio now has eight SUVs, but its share of India's total 25 lakh SUV sales last fiscal declined to 19 per cent from 24 per cent three years ago, IPO documents show.
Also read: From Creta EV to Harrier EV, these are the expected EVs to launch before March 2025
Of the two new gasoline-powered SUVs that Hyundai is planning for India, the first will be based on the Bayon crossover currently sold in global markets and will compete with Maruti's Frontx crossover and Tata's Nexon SUV, three sources said.
The second car will be bigger than the Hyundai Creta SUV and will compete with the Mahindra XUV700.
These two SUVs are expected to boost Hyundai's sales by around 120,000 units annually, a source said. Industry data shows the carmaker sold 615,000 cars in India, of which 63 per cent were SUVs and the rest hatchbacks and sedans. The company exported 163,000 vehicles in the last fiscal.
However, Hyundai's rivals aren't standing still.
Tata, India's top-selling EV maker with a market share of over 75 per cent, has said it plans to launch five EVs in the next three to four years, taking its total to 10.
Mahindra has said it will launch seven electric SUVs and six new gasoline-powered SUVs by the end of the decade. Market leader Maruti is doubling down on SUVs and hybrids and plans to launch six EVs by 2031.
“What has taken Hyundai this far will not necessarily take it into the future. Competition is even more intense,” said an Indian supplier of Hyundai.
Find out about upcoming cars in India, electric vehicles, upcoming bikes in India and cutting-edge technology that is changing the automotive landscape.
