The initial public offering (IPO) of Hyundai India has captured the attention of investors and analysts alike as it opens for subscription tomorrow. The company aims to raise INR 27,870.16 crore through this offering, and several brokerage houses have provided their recommendations based on their analyses of the company’s financial health and market potential. Here’s a summary of Hyundai India IPO recommendations by major brokerage houses.
Hyundai India IPO Recommendations
Aditya Birla Money – Subscribe for long term
Aditya Birla Money has recommended investors with long-term tolerance to consider applying for the Hyundai India IPO. Hyundai has consistently grown stronger and has been one of the most recognized brands in India since its inception and has been the first-mover in various PV categories. “We believe that the outlook for Hyundai continues to be strong owing to its strong parentage and leveraging HMC’s technology and R&D capabilities and strong balance sheet. However, at the upper price band, Hyundai is available at a rich valuation of 26x its FY24 EPS, leaving little on the table for investors. We have a SUBSCRIBE recommendation to this issue for a long term,” noted the research report.
Anand Rathi – Subscribe long term
Anand Rathi has assigned a “subscribe long term” rating to the Hyundai Motor India IPO. “At the upper band, the company is valued at 26.2x its FY24 earnings along with being valued at 26.7x if we annualize FY25 earnings. Following the issuance of equity shares, the company’s market capitalization stands at INR 15,92,581 million, with a market cap-to-sales ratio of 2.28 based on its FY24 earnings. We believe that the issue is fully priced and recommend “Subscribe – Long Term” rating to the IPO,” noted the brokerage report.
Canara Bank Securities – Subscribe
Hyundai India IPO recommendations saw another positive view from Canara Bank Securities. Analyst Sankita V noted that HMI contributes only 6.5% to global revenues and 8% to profitability, Hyundai Motor India is expected to be valued at approximately 42% of its parent company’s market capitalization.
“Furthermore, its P/B ratio stands at an expensive 14.93x. Despite the company’s growth potential and strong market presence, the issue comes with higher valuations. The P/E ratio of 26.28x is above the industry average of 24.41x and far higher than its parent company Hyundai Motor Global’s P/E of 5x. However, HMI boasts industry-leading return ratios, with a RoE of 56.82% and RoCE of 62.9%, significantly surpassing the listed peer averages of 23.25% and 21.85%, respectively. We recommend to SUBSCRIBE this issue for long-term gains,” opined the analyst.
ICICIdirect – Subscribe
ICICIdirect has issued a clear “subscribe” recommendation for the Hyundai IPO. In its analysis, the prominent brokerage house noted steady growth prospects amid industry tailwinds, robust financials & healthy SUV product slate. “We expect limited listing gains to this IPO, however expect HMIL to deliver healthy double-digit portfolio returns over medium to long term,” said the report.
Arihant Capital – Subscribe for long term
Another positive word among Hyundai Motor IPO recommendations came from Arihant Capital which suggested that investors with a medium risk appetite subscribe to the upcoming IPO as a long-term investment. Analysts pointed out several positive factors including R&D from Korea, automated factory, robust distribution and high RoNW.
“We believe the company can take advantage of the growing PV market in India with its diverse offerings. At the upper price band of INR 1960, the issue is priced at a P/E of 26.3x post issue based on the FY24 EPS of INR 74.58. We have a “Subscribe for long term” rating for the issue,” said its recommendation.
SBI Securities – Subscribe for long-term
Hyundai IPO analyst view is positive at SBI Securities which noted that the automaker has the second largest market share in the Indian PV industry after Maruti Suzuki and is also the second largest exporter of cars from India.
“SUVs (higher margin vehicles) contribute a large share of the company’s volumes which reflects in the relatively higher material and operating margins as well as return ratios. Strong brand, blockbuster models such as Creta, Alcazar, Venue and Verna, advanced technology and high export potential are key differentiators. The capacity expansion at Talegaon will help HMIL in ramping up both domestic and export volumes. At the upper price band of INR 1,960, HMIL is valued at 26.3x FY24 EPS. We recommend subscribing to the issue for long term investment horizon,” said its research note.
Chola Securities – Subscribe
Chola Securities is also positive on the upcoming IPO. The brokerage house noted that the automaker’s strong parentage from Hyundai Motors Company has helped its in leveraging new technologies to enhance operational and manufacturing efficiencies. Analysts at Chola find the issue reasonably priced. “The IPO is reasonably priced with a post-issue PE ratio of 26.3x, in line with its peers, and a return on equity of 56.82% (FY24). We recommend a “SUBSCRIBE” rating for Hyundai Motors India Ltd’s IPO,” noted its analyst report.
Hyundai India IPO Recommendations – Bottomline
In conclusion, brokerage houses are generally optimistic about the Hyundai Motor India IPO, recommending subscriptions based on varying risk appetites and investment horizons. While some firms advocate for long-term investments due to growth potential, others emphasize caution due to market volatility and company size considerations.
While Hyundai IPO analyst views are mostly positive, the informal or grey market is presenting confusing signals with a remarkable decline in premium in recent days. This is not uncommon for the market to behave this way before large IPOs and Hyundai is going to make history with the biggest IPO in India. Nevertheless, investors are encouraged to assess their individual risk profiles and conduct thorough research before participating in this IPO.
