Hyundai Motor India Limited - HMIL

Stock Opportunities
1

If someone asks me what is the motivating force for Hyundai,
I would have a ready answer: a desire for better.
_Chung Ju-Yung, Founding Chairman

Hyundai Motor is a South Korean multinational automotive manufacturer and headquartered in Seoul South Korea, which was founded in 1967.

Currently, the company owns 33.88 percent of Kia Corporation and fully owns two marques including its luxury cars subsidiary, Genesis and their electric vehicle brand Ioniq.

In 1996, Hyundai Motor India Limited was established with a production plant in Irungattukottai near Chennai.

HMIL’s first car, the Hyundai Santro was launched on 23 September 1998 and was a runaway success. Within a few months of its inception, HMIL became India’s second-largest automobile manufacturer and the largest automobile exporter. Hyundai Motor India Limited (HMIL) is a wholly-owned subsidiary of Hyundai Motor Company (HMC), South Korea and is the largest passenger car exporter and the second largest car manufacturer in India.

As HMC’s global export hub for compact cars, HMIL is the first automotive company in India to achieve the export of 10 lakh cars in just over a decade. HMIL currently exports cars to more than 87 countries. It has been the number one exporter of passenger cars in the country for the eighth year in a row.

Hyundai Motor India is the second-largest auto OEM in the Indian passenger vehicle market since fiscal 2009.

HMIL has an extensive sales and service network across India, with 1,366 sales outlets and 1,550 service outlets as of 31 December 2023. This network is next only to market leader Maruti Suzuki and ensures wide reach and customer support across rural and urban areas.

2023 Sales Volume by Region

Screenshot (190)
Screenshot (190)1665Ă—549 19 KB

2023 Sales by Vehicle Type

Screenshot (191)
Screenshot (191)1667Ă—577 62.7 KB

Last 5 Months Sales - India

Screenshot (192)
Screenshot (192)1002Ă—610 36.4 KB

Financial Information

Screenshot (195)
Screenshot (195)894Ă—498 35 KB

–

Biggest IPO ever in Indian history

Hyundai Motor India has received approval from Sebi for its ₹25,000-crore IPO, set to be the largest in India’s history and could surpass previous records held by LIC and Paytm.

Offer For Sale : 14,21,94,700 shares (representing a 17.5% stake, by its South Korean parent, Hyundai Motor Co.) It aims to reach a valuation of $30 billion.

Tentative date
Open: 16th October 2024
Close: 18th October 2024
Allotment: 21st October 2024
Listing : 23rd October 2024
Retail Allocation : 35%

7 Likes
2

I am going to be very cautious and sceptical. Hyundai wants to take advantage of the IPO frenzy… that’s it.

For me, this IPO is outright crazy if not outrageous - if 100% OFS was not enough, the Korean promotors are expecting mind boggling premium when compared to Indian peers and Korean listed Hyundai Motors (mcap $47.5 Bn)

Btw… Korean Hyundai Motors is trading at meager PE of 5x and rich dividend distribution of 6% to Hyundai mothership

Hyundai Motor Group, the mothership, is third-largest South Korean chaebol (after Samsung and SK Group), and related to other Hyundai-name industries.

7 Likes
3

If this is your fundamental analysis of the stock, then you should have posted a complete study including the risk factors.

1 Like
4

Thanks for your feedback. I am still in the learning phase so I will try to update myself and fundamental analysis as I learn.

1 Like
5

Hyundai Motor recorded total sales of 64,201 units in September 2024, with domestic sales reaching 51,101 units and exports accounting for 13,100 units. Reported around 10 % YoY declined as the company sold a total of 71,641 units in September 2023.

Hyundai Motor India reported around 6 per cent dip to 51,101 units last month from 54,241 units in the year-ago period.

In September, Hyundai introduced new Hyundai Alcazar 6/7 seater SUV.

Highest ever monthly SUV contribution of 70% to total sales from from Exter, Venue and Creta.

Dual Cylinder CNG in Exter and Grand i10 NIOS resulting in highest-ever CNG contribution of 13.8% to September sales.

Hyundai Motor Company marked a major milestone by the production of 100 million vehicles globally, achieved in 57 years since its foundation.

Monthly Sales Update, India

Screenshot (200)
Screenshot (200)783Ă—342 25 KB

1 Like
6

IPO Updates

Open : 15th Oct. 2024
Close : 17th Oct. 2024
Allotment : 18th Oct. 2024
Listing: 22nd Oct. 2024
Price band: 1900-1960

Lot Size, Retail : 7 shares (213720)
Lot Size, SHNI : 105 shares (205800)
Lot Size, BHNI: 511 shares (1001560)

Registrar : KFIN Technologies Limited

7

Hyundai IPO valued more than Maruti & Mahindra & Mahindra

Given a choice I would rather put my bucks in Mahindra and Maruti rather than subscribing to IPO of Hyundai.

(1) Maruti enjoys market leadership position for last 40 years. Today even with so many players including many MNC’s brands, Still Maruti enjoys 41% Market share. ( Hyundai just 14%).
Maruti’s wide product range with leadership position in growing CNG and SUV market.( CNG volumes now stands at 40% of its total volume)…
Maruti and Toyota produce Hybrids which also enjoys leadership position. Maruti did not prioritise EV introduction strategically. But now they have EV in pipelines.

Even on EV, Tata motors leading with 60% market share.
Hyundai is no where in EV and they have just started CNG aiming to produce only 12% of its volume where Maruti has already reached 40% of its total volume.

(2) (a) Mahindra & Mahindra is putting up a heavy competition with Maruti with respect to the growing SUV market.
M&M, which has Ten SUVs well accepted by the market (Bolero, Bolero Neo, Scorpio, Scorpio N, Scorpio Classic, Thar, XUV3XO, XUV400 XUV700, New Thar Roxx), is extremely well placed to capitalise on the surging demand of SUV.

(b) It also has a Well designed and matured EV program and CNG program.

(c) Apart from its SUV’s, it has a market leadership position in Small / light commercial vehicle which is growing faster than heavy CV.

(d) It has market leadership position in its 3 wheeler EV / CNG

(e) it is the market leader in tractor segment with 42% market share.

(f) In sept 2024, it is the only Auto company which has shown growth in numbers.

(g) Mahindra is perhaps is the only Indian Auto company which exports its products to North America.

Therefore Mahindra & Mahindra is a well diversified automobile company than any other auto company…if one segment does not do well due to market situation , the other one would come to its rescue.

Discl:
I have investments in Mahindra and Maruti from lower level. I may be biased. please do your own assessment before investing.
I may be wrong in my assessment, though I have 36 yrs exposure to Auto industry.

6 Likes
8

Maruti suzuki
Market cap 3.90 L cr
Profit 13500 cr

Hyundai
Profit 6060 cr

Hyundai margin is higher, hence should get high PE vs Maruti. Even if you consider the same PE as maruti, the hyundai market cap should be (3.9*6060/13500)=1.75 L Cr

Current offer is 1.6 L cr that is 10% up considering at par maruti suzuki valuation.

Why should one not invest in the hyundai IPO for both short and long term?

1 Like
9

According report, Hyundai will launch four new locally-manufactured battery-powered vehicles in the country as part of its expansion plans.

Creta EV launch in Jan 2025 followed by Inster EV, Venue EV and Grand i10 Nios EV.

Hyundai intends to make India as one of primary EV manufacturing hubs. Initial production targets are around 26,000 units for Creta EV and 65,000 units for Inster-based EV. Further, Hyundai recently committed Rs 20,000 crore for EV development in India over the next eight years.

Source: Express Drives

Personal Note: If we think that EV is the future, then only 2-3 companies will not be able to fulfill the needs of India.

10

Why are Hyundai’s promoters launching the largest IPO in Indian history?

The primary reason is to take home more than $3 billion. This is a 100% offer-for-sale issue, meaning no funds are being raised for business expansion or working capital. The promoters are merely reducing their stake.

They plan to raise nearly $1 billion from anchor investors, who will have a lock-in period of 30 days for 50% of their holdings and 90 days for the remaining 50%.

That’s one aspect of the story.

The second part is that the IPO is priced at a reasonable P/E ratio of 26, which is moderate and not overly expensive.

Given this scenario, where the IPO comes at a fair valuation but is purely an offer-for-sale with no funds allocated for growth, there’s a good chance that anchor investors might exit once their lock-in period ends.

These are just key points to consider, not a recommendation to apply or skip the IPO.

I personally will wait for its listing and see couple of quarterly results. Wont be bate of FOMO.

4 Likes
11

Very few of us may be aware that the South Korean parent company Hyundai Motors has another unlisted independent entity called Kia Motors in india with similar product lines of Hyundai which would result in to Cannibalization of Hyundai india’s products…

Any new product with high profit high margin products would be launched by the Korean parent company through Kia india rather than Hyundai india.

This is the very characteristics of all MNC operating in India …and Hyundai is not an exception.
Moreover , Hyundai came to india sometimes in 1990’s … Today after almost 30 years in India - what is its market share ?? just 14% as compared with Maruti with 42%.
Hyundai is very slow in Fast growing CNG and EV market …and it may not be able to dislodge Mahindra , Maruti from the fast growing SUV ,& CNG market leadership.

It may not be prudent to pay such a valuation to a company like Hyundai where there is conflict of interest in business of kia and Hyundai. If the parent company wants to reward indian share holders, they should have merged both the arms Kia india .& Hyundai india and then could have come for IPO.

Anyway very little listing gains expected and even if there is some listing gains , the price may not be sustainable

6 Likes
12

Hyundai came in India in 1998. It is not about dislodging anyone. In the end it is about margins. Hyundai India has the highest operating margin among all car manufacturers. Creta SUV still sells like hot cakes. Venue sales are also good. Plus, Marurti and Hyundai are the only two manufacturers whose hatchbacks still sell a lot. Tata and others are nowhere close to them. The IPO may be overpriced but can be a good addition if price comes down. Capturing 15 percent market share in the Indian market is a big achievement. Honda also started operations in early 2000s. Today it is fifth in the list. They understand the Indian market pretty well. They know what sells in India and what does not. That is their MOAT.

3 Likes
13

Is it true, that Hyundai india ,

  1. Distributed dividend 10,000 crores nearly (60% of in hand cash) to parent company
  2. Increase the royalty to 5% from 3.5%
    Just before the ipo?
2 Likes
14

Yes and that has left bad taste for many. I want to play on hyundai for index inclusion later but wont be going for ipo.
Disclaimer: I have no holdings in autmobile sector

15

Good to debate before we invest our hard earned money in an IPO like Hyundai. Some of us in favour of investing in this IPO, some would like to invest on listing and on decline and some of us would never like to invest at all. Only Time and market could teach us a lesson …no one else…when I lose money , it is a lesson for me …when I gain , it is also a lesson for me.:grinning:

To me , the red flags are clear.

(1) Hyundai motors parent company Hyundai Global has a P/E of just less than 5 which owns and earns money from 5 independent entities / Brands namely Kia Corporation, Genesis- Luxury cars & Ioniq - EV. and Hyundai India and Kia india operations.
But the parent company expects Indian investors to pay a 25 P/ E from India for its lone entity Hyundai motors India .

(2) In india itself - there is a conflicts of interest in its business strategy with two parallel set ups - Kia & Hyundai - they are going to list Hyundai motors and kia would remain as its unlisted entity so that the intention to divert its high margin products through Kia india so that they don’t have to share profit with Indian investors.

(3) The parent company when they found it difficult to increase market share (infact their market share is coming down in recent days) , they have planned to take some profits out of their investment in India.

They will be getting a return of196 X with its current IPO divestment plan in India which they would have never got from Korean investors

(4) Just before IPO, they have increased loyalty from 3.5 % to 5% and repatriated cash balance of Rs10000 crores to their motherland in form of Dividend before the IPO with a clear intention of not sharing the cash with Indian investors

(5) In spite of all above concerns , Indian investors are crazy to pay for this IPO which Hyundai wants to take advantage of.
Anyway as of end of day Two , 42% already subscribed Let us see if it gets subscribed 100% - i would not wonder if it does as I say we as Indians (that includes me too :grinning:) tend to make A quick buck on listing gains. But there are equal chances of not making any money or even losing money on listing. I wish people make money and don’t lose money at any cost -make a safe exit before they make a loss- All the best :pray::slightly_smiling_face:

in a lighter note, When Short term gain tax was increased from 15 to 20% everyone made hue and cry, but for LTCG went up from 10 to 12.5 % , very few reacted

6 Likes
16

Hyundai IPO- Poor participation from Retail. Retail portion was undersubscribed

It is only the QIB’s who came to the rescue.

So the investors are banks, pension funds, insurance companies, MF, venture capital funds, alternative investment funds.

It appears inspite of poor subscription , many retail investors may not get allotment.

GMP crashed by 3% below IPO price

1 Like
17

1120Ă—600 200 KB

HMIL recently launched the EXTER and Grand i10 NIOS Hy-CNG Duo. with its catchy tagline “Space Bhi. Mileage Bhi.,”

Tarun Garg, Whole Time Director & Chief Operating Officer stated, “As a brand committed to delivering innovative and sustainable mobility solutions, we are thrilled to see the growing contribution of our CNG-powered powered vehicles, which accounted for 13% of our total sales in September 2024.” The introduction of Hy-CNG dual-cylinder technology has received very positive customer feedback, with the CNG powertrain’s contribution in the EXTER and Grand i10 NIOS rising to 25% and 20% respectively."

The EXTER & Grand i10 NIOS Hy-CNG Duo are powered by 1.2 l Bi-Fuel (Petrol with CNG) engine paired with 5 Speed Manual Transmission delivering a mileage of 27.1 km/kg and 26.9 km/kg respectively (ARAI Tested). The company fitted CNG system which is strategically placed under the luggage board, bringing out the practical usage of the boot space and sufficing the travel needs of the customers.

1 Like
18

There is so much negativity surrounding the Hyundai IPO. It is a well-run company, with decent ROCE and decent profitability. Despite being a laggard in EV, it still commands a 14% market share. Imagine what will happen when the Creta EV is launched. Creta is the second-highest-selling 4-wheeler vehicle in India.

It almost seems like negativity is planted so that retail does not participate.

3 Likes
19

Sometimes you have to take a step back to view things from a bird’s-eye perspective.

Once the IPO is out, and seeing couple of quarters of results we can clearly decide.

Plus by the time IPO is launched the dust will clear around ----

1 Like
20

Infact, I have already seen many IONIQ5 (EV) on road…and Kia motors that is partly owned by Hyundai are also hot sellers.
If the stock corrects to reasonable valuation, it might be worth investing.

2 Likes