India's largest IPO set to open next week; all you need to know

Hyundai Motor India Ltd, the Indian subsidiary of the South Korean automotive player Hyundai, is getting ready for an Initial Public Offering (IPO) scheduled for October 15. This event will see the IPO conclude on October 17, and the opportunity for anchor investors will begin on October 14. This is the first IPO by an automaker in over two decades, following the listing of Japanese firm Maruti Suzuki in 2003.

Offer for sale

The Hyundai IPO is poised to raise approximately ₹28,000 crore, with a price band set between ₹1,865 and ₹1,960 per share. This substantial issue positions Hyundai Motor India’s IPO as the largest in India since the ₹21,000 crore IPO of the Life Insurance Corporation of India (LIC) in 2021.

Hyundai Motor India’s proposed Rs 28,000-crore IPO is entirely an offer-for-sale (OFS) of 142,194,700 equity shares of the face value of Rs 10 each by promoter Hyundai Motor Company, with no fresh issue component, according to the draft red herring prospectus (DRHP) filed in June.

An Offer for Sale is a method in an IPO where existing shareholders (like founders, promoters, or private equity holders) sell their shares to the public. The absence of a fresh issue component in the IPO means that the funds raised will primarily benefit the selling shareholders rather than directly infusing capital into the company’s operations.

Based on the upper price band, Hyundai Motors India's market capitalisation is estimated to reach approximately Rs 1.59 lakh crore.

Minimum 7 shares

The lot size for retail investors has been established at 7 shares, necessitating a minimum investment of ₹13,720 to participate. For small Non-Institutional Investors (NIIs), the minimum investment required is for 15 lots, equating to 105 shares, and aggregating up to ₹205,800. Meanwhile, big NIIs will need to bid for 73 lots, or 511 shares, amounting to a total of ₹1,001,560.

Hyundai Motor India has demonstrated a financial growth, with revenue increasing by 16% and profit after tax (PAT) rising by 29% from the financial year ending March 31, 2023, to the year ending March 31, 2024. The company's revenue for the latest fiscal year was ₹17,567.98 crore, with total assets valued at ₹25,370.24 crore and a net worth of ₹12,148.71 crore, 

The perfect timing

The timing of Hyundai’s IPO is particularly notable. The Indian automotive sector has seen considerable growth and transformation in recent years, spurred by advancements in technology and a shift towards electric vehicles. 
Market participants are likely to scrutinise the company’s growth trajectory and financial health closely.