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Hyundai Motor India's IPO: Pricing at Top of Range to Raise $3.3 Billion

AInvestThursday, Oct 17, 2024 2:46 am ET
1min read
Hyundai Motor India, the Indian subsidiary of the South Korean automotive giant, is set to price its shares at the top of the indicated range in its upcoming initial public offering (IPO), according to sources familiar with the matter. The company aims to raise approximately $3.3 billion (Rs 27,870.16 crore) through the IPO, which is expected to be one of the largest in the country's history.

The pricing decision comes amidst a backdrop of strong market conditions and robust investor demand. The Indian stock market has witnessed a significant rally in recent months, with the benchmark indices touching record highs. This positive sentiment, coupled with Hyundai's strong brand and market position, is expected to drive subscription for the IPO.

Hyundai Motor India's financial performance and growth prospects have also played a crucial role in the pricing decision. The company has witnessed consistent growth in revenue and profits over the past few years, driven by strong demand for its vehicles in the domestic market and exports. In the financial year 2023, the company reported revenue of Rs 60,307.58 crore and a profit after tax of Rs 4,382.87 crore.

The company's competitive landscape and market position have also influenced the pricing strategy. Hyundai Motor India is one of the leading players in the Indian automotive market, with a strong portfolio of passenger vehicles, including sedans, hatchbacks, SUVs, and electric vehicles. The company's manufacturing plant near Chennai is optimized to produce its full range of vehicle models, making it a key part of Hyundai's global export hub.

The top-end pricing strategy is expected to have a significant impact on the IPO's subscription rate and investor demand. A higher price band may deter some retail investors, but it is likely to attract institutional investors and high net worth individuals (HNIs) who are looking for lucrative investment opportunities. The pricing strategy is also expected to influence the post-IPO performance of Hyundai Motor India's share price, with analysts predicting a strong debut.

The pricing strategy also compares favorably with other recent IPOs in the automobile sector. Maruti Suzuki India, the country's largest carmaker, had priced its shares at the top of the indicated range in its IPO in 2012, raising Rs 1,300 crore. Similarly, Tata Motors had priced its shares at the top of the range in its IPO in 2004, raising Rs 1,100 crore.

In conclusion, Hyundai Motor India's decision to price its shares at the top of the range in its IPO is a reflection of the company's strong financial performance, robust market conditions, and positive investor sentiment. The pricing strategy is expected to drive subscription for the IPO and contribute to the company's growth and expansion in the Indian market.
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