Hyundai Motor India Ltd’s (HMIL) market share has ranged between 15% and 17% since it started operations in 2008, with monthly average car sales being nearly a third of market leader, Maruti Suzuki India. However, that is the least of worries for the company, and it would continue to be focused on qualitative growth, the executives said.
The maker of Creta and Tucson SUVs has held on to the position of India’s second largest carmaker by sales since 2009.
“Being the third largest company globally, HMC has a very strong ecosystem and R&D capability. We are positioning HMIL for emerging markets,” said Unsoo Kim, managing director and chief executive at HMIL. He said the public issue will give an opportunity to global and domestic investors to “participate in Hyundai’s growth story”.
Asked whether bridging the volume gap with Maruti will be a priority and on the company’s plan to respond to rising competition from Tata Motors and Mahindra & Mahindra, Tarun Garg, chief operating officer, HMIL said, “We believe in quality of growth. We have had a very good domestic and exports mix, which is a big advantage.”
“Now that we have an additional capacity of 250,000 units coming from the Pune plant which will take the total capacity to 1.3 million units by 2028; all the levers of growth are in place. Positions can keep on changing. We will continue to set new benchmarks in terms of introducing new technologies,” he added.For the June quarter, HMIL reported a 4.3% year-on-year (YoY) revenue growth at Rs17,344 crore with exports contributing 24%. Net profit for the quarter stood at Rs 1,489.65 crore, compared to Rs 1,329.19 crore in the previous year.HMIL, which is slated to get publicly listed on October 22, will use part of the IPO proceeds raised through an offer for sale (OFS) for building advanced technologies and strengthening its R&D capabilities. It has chosen to take the OFS route over issuing fresh shares as it is well capitalised and generating enough cash from its operations to fund expansion, the executives said.
HMIL will sell the shares at a price band of INR1,865 – Rs1,960 apiece. At the upper range of the price band, the company will be valued at $19 billion.
Starting with the electrified version of the Creta, which is expected to go on sale in the March quarter, the company plans to launch four EV models over the next few years. It is also in the process of localising its EV supply chain such as battery packs and battery cells, besides investing in EV charging infrastructure, said Kim.
HMIL has invested about Rs30,000 crore in the Indian operations over the last 26 years and plans to invest an additional Rs32,000 crore over the next 8 to 10 years.
The company paid a special dividend of Rs10,782 crore in FY24 to its Korean parent.
A high mix of SUVs— 68% of total sales in September—has boosted its average selling price substantially. The contribution of passenger vehicles with average dealership price of more than ?1,500,000 to its domestic sales has risen to 19.81% last fiscal from 13.93% in FY22. It was 21.53% in the three months ended June.
According to a research note by Nomura, Hyundai “deserves a valuation premium” over Maruti, considering the latter’s ongoing market share decline. “HMC’s market cap in Korea is $39.6bn, as of 25 September. If HMI’s market cap ends up at $18-20bn, the value of the Indian entity would represent 45-50.5% of the consolidated HMC entity’s market cap. Equity method income from HMI has represented 7-8% of HMC’s consolidated net income in 2023-1H24. This will likely raise investors’ attention on HMC’s valuation which is underestimated by the market,” it said.