Hyundai Motor’s strategic move to launch a USD 3 billion Initial Public Offering (IPO) in India marks a significant step for the automaker, aiming to achieve dual objectives: expand its footprint in one of the world’s fastest-growing automotive markets and address the perceived “Korea discount” that has long plagued its valuation back home.
With its IPO set to become one of India’s largest-ever listings and Hyundai’s first outside South Korea, the carmaker is poised to accelerate its growth trajectory in a country where it commands a substantial 15% market share, trailing only behind Maruti Suzuki. Over the past 25 years, Hyundai has established itself as a key player in India’s automotive landscape, renowned for offering affordable vehicles that resonate with price-conscious consumers.
Analysts and insiders familiar with Hyundai’s plans suggest that the IPO will not only enable the company to reduce its reliance on its parent company for funding but also provide the financial leverage to compete more effectively against local rivals like Tata Motors. Moreover, it presents an opportunity for Hyundai to chart its own course and implement ambitious growth initiatives in a market that accounts for a significant 14% of global automotive sales.
The bulk of the IPO proceeds are earmarked for Hyundai’s foray into the electric vehicle (EV) segment in India, including the launch of EV models, establishment of a charging infrastructure network, and the construction of a battery manufacturing facility. Additionally, funds will be allocated to bolstering Hyundai’s manufacturing capacity within the country, further solidifying its presence in the rapidly evolving Indian automotive landscape.
Despite declining to confirm specific IPO plans, Hyundai’s spokesperson emphasised the company’s continuous evaluation of various strategies aimed at enhancing corporate value, underscoring the dynamic nature of its strategic initiatives.
The timing of Hyundai’s India IPO coincides with the remarkable surge in India’s stock markets, which have witnessed remarkable growth over the past few years. By tapping into this favourable market sentiment, Hyundai aims to not only capitalise on India’s economic momentum but also address the persistent “Korea discount” issue that has dampened its valuation on the Seoul stock exchange.
Analysts estimate Hyundai’s India unit IPO could command a valuation of USD 30 billion, surpassing more than half of its Korea-listed parent company’s market capitalization of USD 46 billion. This significant disparity underscores the potential for Hyundai to unlock greater value by diversifying its listing locations and tapping into the investor appetite for Indian equities.