A like-to-like comparison of their P/Es shows its biggest rival MSIL trading at a multiple of 29.3-30.4X over its FY24 earnings. For M&M and Tata Motors the multiples stand at 30-37X and 10-11.4X, respectively.
Many brokerages find the HMI IPO issue at a high valuation, opining that there is nothing for the investors in terms of listing or near term gains.
Commenting on the stock’s valuation, Aditya Birla Money said in a note that at the upper price band, Hyundai is available at a rich valuation, leaving little on the table for investors.
Canara Bank Securities is also of the view that the issue comes with higher valuations despite the company’s growth potential and strong market presence.
Meanwhile, brokerage Bajaj Capital said that the issue is fully priced-in though it is of the view that the company is poised for bright prospects post completion of its ongoing expansions. Concurring with above views, expert Prashanth Tapse of Mehta Equities said that the IPO is asking a premium valuation to Maruti Suzuki, given the company’s strong backing from its Korean parent, its premium models and growing share in the SUV market. “There is nothing left for investors from a listing gains point of view,” this analyst said.A clutch of brokerages also find Hyundai’s valuations at a fair value. Among them are LKP Securities and KRChoksey. The asking price is at a fair value as compared to its closest peer Maruti Suzuki, LKP Securities said in a note.
ICICI Securities finds HMI at a tad discount to industry leader Maruti Suzuki based on FY24 earnings.
Hyundai Motor India has set the price band at Rs 1,865 – Rs 1,960 per share and the company’s profit after tax (PAT) for the financial year ended March 31, 2024 stood at Rs 6,060 crore. The revenue from operations stood at Rs 69,829 crore.
Hyundai Motor shares will be listed on October 22, Tuesday.
Post the issue the implied market cap is at Rs 1,51,539 – 1,59,258 crore.
Ahead of the issue opening, the company’s shares are trading with a GMP of Rs XX in the unlisted market. The shares have seen a sharp fall from a premium of Rs 570 two weeks ago when the shares started trading in the unlisted market.
Incorporated on May 6, 1996, Hyundai Motor India is promoted by Hyundai Motor Company (HMC) and the parent HMI is the third largest auto original equipment manufacturer (OEM) in the world based on passenger vehicle sales in CY2023. They have been the second largest auto OEM in the Indian passenger vehicles market since Fiscal 2009 in terms of domestic sales volumes.
Also Read: Hyundai IPO: Be mindful of these 7 risks ahead of issue opening on Tuesday
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)