Hyundai Motor's First Overseas IPO in India
"Stock Price Could Rise Up to 30%" Securities Firm Report
As Hyundai Motor Company has initiated the initial public offering (IPO) process for its Indian subsidiary, expectations for local business expansion have significantly increased. Industry experts anticipate that Hyundai Motor Group will be able to increase its investment capacity, considering that India is its largest overseas production base and a highly profitable key business site.
On the 17th, Hyundai Motor stated regarding reports on the Indian subsidiary's IPO, "We have submitted the Draft Red Herring Prospectus (DRHP), a preliminary document, to the Securities and Exchange Board of India," adding, "The final listing decision will depend on market conditions and the results of the pre-IPO demand forecast." Currently, the company holds 100% of the shares of its unlisted Indian subsidiary (HMI). According to foreign media, it plans to offer a portion of these shares to the market. The industry expects that this IPO could raise approximately $3 billion (about 4 trillion KRW).
Jaeil Lee, a research fellow at Eugene Investment & Securities, assessed Hyundai Motor’s local business, competitor Maruti Suzuki’s market value, and short-term market outlook, suggesting that Hyundai’s stock price could increase by up to nearly 30% more. He stated, "Assuming the market capitalization of Hyundai Motor’s Indian subsidiary is 23.7 trillion KRW, Hyundai Motor’s stock price is expected to rise by about 18.8% from the current level," adding, "Reflecting an optimistic forecast, the increase in corporate value could reach approximately 16.8 trillion KRW (29.9% compared to the current stock price)."
According to the company, Hyundai Motor India (HMI) posted a net profit of 921.1 billion KRW last year. Compared to other overseas plants operating complete vehicle factories, this is the second highest after the United States. From the Hyundai Motor Group perspective, while the U.S. is the largest market by sales volume, India leads in local production with 1.08 million units (as of 2023), making it the largest overseas production site by far. The Indian plant is responsible not only for local demand but also for producing export volumes to nearby regions such as Africa and the Middle East.
The fact that Hyundai Motor’s stock price rose more than 4% in the domestic stock market on the same day is interpreted as reflecting this background. Typically, when a subsidiary goes public, the parent company’s stock price often falls because the parent’s corporate value decreases due to the reduction in its shareholding. However, in this case, the market seems to value the future growth potential more highly. Hyundai Motor India not only has its own new vehicle development capabilities but also has a well-established local infrastructure for front-end industries such as installment financing and insurance, which supports a greater long-term growth potential.
Hyundai Motor has clearly stated its intention to invest substantial resources in its Indian operations to aggressively target the local market. This is based on the expectation that demand for complete vehicles will steadily increase due to India’s status as the world’s most populous country, and that the transition to electrification is progressing rapidly. Last year, Hyundai revamped the Pune plant acquired from General Motors (GM) to establish an annual production capacity of 1 million units, and combined with Kia’s production volume, it aims to build a production system capable of 1.5 million units annually.
Additionally, Hyundai is collaborating with local battery companies to equip electric vehicles with batteries produced in India and has planned various social contribution activities as part of localization efforts. Hyundai Motor Group Chairman Chung Euisun personally visited India in April this year and held a town hall meeting with about 400 local employees. This was the first time the chairman held a town hall meeting with overseas plant employees in India.
At that time, Chairman Chung said, "The India region is one of the areas that has contributed most significantly to Hyundai Motor Group’s growth. Even during the COVID-19 pandemic, it overcame numerous crises such as the global economic downturn and supply chain disruptions and consistently delivered strong results," adding, "As we expand our business into Asia, the Middle East, and Africa, we will nurture India as a global export hub."
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