Top 10 Must-Know Facts About Hyundai Motor India Before the IPO

Hyundai Motor India Ltd, the Indian subsidiary of the South Korean automaker Hyundai, has submitted preliminary documents to the Securities and Exchange Board of India (SEBI) to initiate an initial public offering (IPO). If successful, Hyundai IPO will be the largest in India’s history, surpassing the significant Rs 21,000 crore share sale by LIC. Hyundai Motors, a significant player in this market, continues to demonstrate strong hold in the 4-wheeler market. This comprehensive analysis delves into Hyundai’s market positioning, comparing it with other key players, and examines broader industry trends and factors influencing the sector. Following are 10 facts to know about Hyundai Motor India Ltd

1. Hyundai Motor India Ltd (HMIL) is an integral part of the Hyundai Motor Group, the third largest auto original equipment manufacturer (OEM) globally based on passenger vehicle sales in the calendar year (CY) 2023, according to the CRISIL Report. This highlights Hyundai’s robust presence and significant influence in the global automotive market.
   
2. In CY2023, HMIL ranked among the top three contributors to Hyundai Motor Corporation’s (HMC) global sales volumes. The company’s contribution to HMC’s sales volumes has notably increased from 15.48% in CY2018 to 18.19% in CY2023, reflecting HMIL’s growing importance within the global operations of Hyundai.
3. HMIL’s manufacturing plant in Chennai, Tamil Nadu, was HMC’s first global integrated manufacturing plant outside Korea. As of March 31, 2024, this plant had a production capacity of 824,000 units, underscoring its pivotal role in Hyundai’s production strategy. The Chennai Manufacturing Plant’s capabilities contribute significantly to Hyundai’s supply chain and manufacturing efficiencies.
4. HMIL’s value proposition includes manufacturing feature-rich, reliable, and innovative passenger vehicles at competitive prices. To enhance profitability, HMIL focuses on localising parts and materials. In fiscal 2023 and the nine months ending December 31, 2023, the company sourced approximately 90% of its parts and materials from suppliers based in India, particularly from districts adjoining the Chennai Manufacturing Plant. This localisation strategy not only improves cost efficiencies but also ensures flexibility in the manufacturing process.
5. Hyundai Motor Group’s largest supply chain outside Korea is located in India. As of March 31, 2024, this supply chain comprised 194 tier-1 and 1,083 tier-2 suppliers. This extensive network is crucial for maintaining the production and operational efficiencies of HMIL.
6. To further expand its manufacturing capabilities in India, HMIL recently acquired a manufacturing plant in Talegaon, Maharashtra. This plant is expected to commence commercial operations partly in the second half of fiscal 2026. Once fully operational, HMIL’s combined annual production capacity across the Chennai and Talegaon plants is projected to increase to 1,074,000 units, bolstering its production scale and market reach.
7. In line with its commitment to sustainability, HMIL is developing an EV supply chain and manufacturing capabilities in India. This includes EV parts localisation and the development of an EV platform. Additionally, HMIL is investing in research and development on cost-effective green hydrogen energy in collaboration with the Government of Tamil Nadu and the Indian Institute of Technology Madras. These initiatives involve a substantial investment commitment of approximately Rs 32,000 crores.
8. HMIL has been the second largest auto OEM in India in terms of domestic sales volumes since fiscal 2009. Furthermore, the company has been the largest exporter of passenger vehicles from India from fiscal 2005 to the first 11 months of fiscal 2024, exporting 3.53 million passenger vehicles to over 150 countries. This strong export performance highlights HMIL’s extensive global reach.
9. HMIL has demonstrated robust financial performance in recent periods. For the nine months ending December 31, 2023, the company’s revenue from operations stood at Rs 52,157.91 crore, with fiscal 2023 revenue reaching Rs 60,307.58 crore—a 27.29% increase from the previous year. Profitability also surged, with profits hitting Rs 4,382.87 crore for the nine months ending December 31, 2023, and Rs 4,709.25 crore for fiscal 2023, up from Rs 2,901.59 crore in 2022. The profit margin for fiscal 2023 was 7.67%, an improvement from 6.05% in 2022. The EBITDA margin, excluding other income, was stable at 12.52%, and the return on capital employed rose to 28.75% in fiscal 2023 from 20.37% in 2022.
10. HMIL has entered into arrangements with the Governments of Tamil Nadu and Maharashtra for developing EV manufacturing infrastructure and expanding production capabilities. These initiatives, which involve significant investments and offer various incentives, are expected to further enhance HMIL’s operational efficiency and market position.

Conclusion

Hyundai Motor India Ltd is a significant player in the Indian automotive sector, with a strong market presence and a commitment to innovation and sustainability. Its strategic focus on localisation, expansion of manufacturing capabilities, and development of EV infrastructure position it well for future growth. The company’s robust financial performance and extensive supply chain network further underscore its competitive edge. As HMIL prepares for its initial public offering, its market strategies and financial health make it a formidable contender in the Indian automotive industry.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.