India's largest IPO in the making as Hyundai aims to make Diwali debut on Dalal Street: Report

IPO 2024: South Korea's Hyundai is planning to list its local unit to take advantage of India's IPO boom, reported The Economic Times. As per the report, this could be the country's largest initial public offering if it comes to fruition.

The plan envisages a Diwali listing between September and November this year. The Economic Times report further mentioned that the listing will depend on several external factors, including the vigour of the Indian capital markets and various macroeconomic factors.

IPO Plan

Global investment banks including Goldman Sachs, Citi, Morgan Stanley, JP Morgan, Bank of America, HSBC, Deutsche Bank and UBS were reportedly in Seoul last week to make IPO pitches to the Hyundai leadership. While the bankers valued the company at $22-28 billion, Hyundai is exploring a 15-20% dilution to raise $3.3-5.6 billion. Hyundai Motor Co (HMC) is listed in South Korea at a market capitalisation of $39 billion.

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At $28 billion, Hero Motors India Limited will be valued at 48 times FY23 earnings, while at the lower end of the band at $22 billion, it would be 38.4 times.

The Economic Times quoted a person with the knowledge of the matter and said that the work has begun at the headquarters and Hyundai wants to deepen the relationship with India, seeing it as a strategic market.

As per BSE data, only Maruti Suzuki and Tata Motors are valued higher at current market prices at Rs 33.4 lakh crore and Rs 29.3 lakh crore respectively.

Hyundai's P/E Ratio

South Korea's automakers relatively have lesser P/E ratio compared to their Japanese and US peers. While South Korea's automakers are trading at a low price-to-earnings (P/E) ratio of 4.1-4.6, their Japanes rivals have a P/E ratio of 7.3 and 5.4 for those in the US.

Hence listing their subsidiaries in growth markets such as India could potentially trade at superior P/E multiples than their parents. For Example, Maruti Suzuki trades at 23 times its projected FY25 earnings, while parent Suzuki Motor Corp is at eight times.