New Delhi/Mumbai, Oct 9 (PTI) Hyundai Motor India Ltd (HMIL), the Indian arm of South Korean automaker Hyundai, on Wednesday said it has fixed a price band of Rs 1,865-1,960 per share for its Rs 27,870 crore initial public offering (IPO) that opens for subscription on October 15.
The company held a roadshow for its IPO which would be the largest in India, surpassing LIC's initial share sale of Rs 21,000 crore.
Speaking to PTI, HMIL Chief Operating Officer Tarun Garg said the company expects a very good traction in demand of cars during the ongoing festival season and is not worried about the global headwinds faced by the automobile industry.
"We are not worried and we are seeing a very good traction because after a long time not just the Navaratra, Dussehra as well as Dhanteras are in the month of October. So it's a great sign for the auto industry," Garg said.
He said India is a very strong growth market, which has consistently been growing. "Some kind of moderation and fluctuations will always happen. In any case, we have always seen the months of June, July, August, September because of heat, among others. But now we have entered the festival season. I don't think we are worried."
Speaking at the roadshow, HMIL Managing Director and Chief Executive Officer Unsoo Kim said, "India is the most exciting market in the world. Hyundai Motor India benefits from parent Hyundai Motor Company's extensive global ecosystem, which gives it a strategic and competitive edge against the competitors."
HMIL commenced operations in India in 1996 and currently sells 13 models across segments.
"It is the right time to further Indianise Hyundai's operations and the IPO will ensure the company is even more dedicated to success in the domestic market, offering growth to shareholders and investors," Kim added.
HMIL's initial share-sale will conclude on October 17 and the bidding for anchor investors will open for a day on October 14, the company said.
The proposed IPO is entirely an offer-for-sale (OFS) of 14,21,94,700 equity shares by promoter Hyundai Motor Company (HMC), with no fresh issue component.
This is the first initial share sale of an automaker in over two decades, following Japanese carmaker Maruti Suzuki's listing in 2003.
The South Korean parent is diluting some of the stake through the OFS route. Since the public issue is completely an OFS, Hyundai Motor India Ltd, the second largest carmaker in India, after Maruti Suzuki India, will not receive any proceeds from the IPO.
HMIL stated that it expects that the listing of the equity shares "will enhance our visibility and brand image and provide liquidity and a public market for the shares".
At the upper end of the price band, the IPO size has been pegged at Rs 27,870 crore and the company's market valuation at around Rs 1.6 lakh crore post-issue.
According to Garg, "HMC will aggressively look at using this (proceeds) to introducing new models, new technologies and, of course, R&D capabilities for Hyundai Motor India and secondly we also have to figure out net profitability and PE ratio."
On the pricing part, Garg said the valuation has been decided based on the feedback given by the bankers and "we can only present the very strong financial matrices of our company, in terms of revenue, EBITDA margins and capital employed".
"All these matrices are positive and we have always believed in quality of growth and that has really helped us to not only (post) growth, but sustainable growth," Garg added.
The company further said that enquiries and bookings in October so far have been strong compared to September with the first eight days of this month witnessing a growth of 30 per cent.
HMIL said it is also looking to launch the Creta EV in the March quarter of the current fiscal, while four other EVs are lined up for the next few years.
The IPO comes at a time when the primary market is experiencing strong interest from both issuers and investors across various sectors.
As many as 63 companies have mobilised around Rs 64,000 crore collectively via mainboard, marking a 29 per cent increase from Rs 49,436 crore collected by 57 firms through the route in the entire 2023.
The strong momentum in IPO markets is driven by several key macroeconomic, sector-specific factors and willingness of funds to look at new ideas which is partially led by strong inflows into domestic mutual funds as well as the robust capital formation across corporate India, experts say.