Hyundai Motor India IPO: A Look At The Primary Business Health

Hyundai Motor India Ltd. set the price band for its initial public offering at Rs 1,865-1,960 apiece on Tuesday.

The carmaker is looking to raise up to Rs 27,870 crore through the offering—touted to be India's largest. The pure offer-for-sale, will see the South Korean parent company offload 14.2 crore shares.

The shares which are part of the issue represent 17.5% stake at a face value of Rs 10 each, based on the draft red-herring prospectus submitted to SEBI in June. Notably, the parent will not issue new shares in this IPO.

Hyundai's primary business segment is passenger vehicles, offering a diverse range that includes compact cars, sedans, SUVs, and luxury models. Some of its popular offerings feature the Hyundai Creta, Venue, and Verna.

Domestic passenger vehicle industry is an oligopolistic market with few players dominating the entire industry, according to the company.

Maruti Suzuki India Ltd. leads the passenger vehicle industry in terms of domestic sales volumes. Hyundai Motor India is the second largest contributor to the domestic sales, followed by Tata Motors Ltd. and Mahindra & Mahindra Ltd. These four players together contribute approximately 80% of the market.

Entering the Indian market with the Santro in 1998, Hyundai has grown to become the second-largest carmaker in the country, holding around a 15% market share in passenger vehicle segment.

Within this segment, the company's share in small cars reduced from 46.9% in fiscal 2019 to 34.4% in fiscal 2023, according to the DRHP. While, share of SUVs increased from 23.1% in fiscal 2019 to 44.0% in fiscal 2023.

Typically, hatchbacks are priced (ex-showroom) between Rs 4 lakh to 10 lakh, sedans between Rs 10 lakh to 25 lakh, while SUVs are normally priced within Rs 6 lakh to 45 lakh range and MPVs are between Rs 10 lakh to 30 lakh. Within SUVs, compact SUVs are in the Rs 6 lakh to 15 lakh range, mid-size SUVs are priced between Rs 10 lakh to 25 lakh, and large SUVs are typically priced between Rs 15 lakh and 45 lakh.

Hyundai introduced its first locally manufactured SUV in 2015—the mid-sized Creta—which quickly became its top-selling model. Currently, its portfolio includes eight SUVs among 13 total models, but its share of India's SUV market fell from 24% to 19% over the past three years, according to IPO documents.

India ranks as Hyundai's third-largest revenue market globally, after the US and South Korea.