Planning to apply for Hyundai Motor India IPO? Consider these risks first

Hyundai Motor India IPO opens on October 15, Photo: Bloomberg

3 minutes reading Last update: October 14, 2024 | 10:13 am STI

One of India’s largest and most anticipated initial public offerings (IPO) – Hyundai Motor India IPO – is scheduled to open for subscription on Tuesday, October 15, and will conclude on Thursday, October 17, 2024. In Amidst the excitement, brokerage Mirae Asset highlighted some risks that investors should consider before subscribing to the IPO.

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Hyundai Motor India’s IPO is entirely an offer for sale (OFS) of 142,194,700 shares, amounting to a total of Rs 27,870.16 crore. Its price range is fixed at Rs 1,865 to Rs 1,960 per share. The minimum lot size for subscription to Hyundai Motor India IPO is 7 shares. Hence, the minimum investment amount required by retail investors is Rs 13,720.

The lead managers of Hyundai Motor’s IPO include Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities & Capital Markets, JP Morgan India and Morgan Stanley India. Meanwhile, Kfin Technologies is the registrar of the issue.

Here is a list of the main risks highlighted by Mirae Asset for Hyundai Motor’s IPO:

– The two Hyundai Motor Company group companies, Kia Corporation and Kia India, may face a conflict of interest as they both operate in similar lines of business.

– Any increase in the prices of parts and materials may adversely affect the business and operating results.

– Hyundai Motor India’s dependence on selected suppliers for parts and materials may be a risk, as any disruption in their availability could negatively impact operations.

– The automobile company’s operations may also be affected if there is any reduction in demand or disruption in the manufacturing of Sports Utility Vehicles (SUVs) or other models of passenger vehicles. Hyundai Motor India is substantially dependent on sales of SUV models in India.

– Hyundai Motor India’s long-term competitiveness depends on the evolution of the electric vehicle (EV) market and the adoption of alternative fuels in India. Failure to recognize these market trends and meet customer EV demands could harm the company’s operations.

About Hyundai Motor India (HMIL)

Hyundai Motor India is a wholly owned subsidiary of Hyundai Motor Company, the third largest automotive OEM (Original Equipment Manufacturer) in the world. Hyundai Motor India was formed on May 6, 1996 by Hyundai Motor Company.

It is the second largest automobile OEM in the Indian passenger vehicle market since fiscal 2009. Hyundai Motor India has a diverse portfolio of 13 passenger vehicle models across segments such as sedans, hatchbacks, SUVs and EVs.

First published: October 14, 2024 | 10:06 STI