India’s Biggest IPO – Rs 278700000000 Is Here! – Hyundai Motor IPO Review

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Howdy folks! Welcome back to the Tradingpartner.in 

Markets started the week on a positive note with the Nifty and Sensex each ending +0.7%. Midcaps (+0.4%) and Smallcaps (+0.4%) had a decent day too. The advance-decline ratio was evenly split.

Most sectors ended in the green. Real Estate (+1.6%), IT (+1.3%) and Banks (+1.3%) saw the most buying. Media (-1%) and Metals (-0.3%) witnessed selling pressure.

Hyundai Motor India’s massive IPO kicks off tomorrow! Check out our analysis below to help you decide whether to subscribe.

DMart was the top NSE 500 loser after a disappointing Q2. 

 

 

Wipro, IEX, and Bajaj Housing Finance saw big movements today. Look at their charts below to see why.
IPCA Laboratories (+2%) hit a record high after Motilal Oswal upgraded the stock; the brokerage sees a further +16% upside from current levels.
Sudarshan Chemical (-7%) will consider raising funds at its meeting on October 16.
Ola Electric (-3%) was down after facing regulatory scrutiny over its latest aggressive discount scheme.
Block deals. Trent was in focus after 10.4 lakh shares (0.3% equity) changed hands in a block deal; the buyers and sellers were unknown. Transformers and Rectifiers (India) hit a +5% upper circuit after 27 lakh shares traded hands.
Premier Energies rallied +10% intraday after its subsidiary bagged multiple orders worth Rs 765 cr.
Here are the closing prints:

 

 
INDEX CLOSING POINTS % GAIN/LOSS
NIFTY 25,128 +0.7%
BANK NIFTY 81,973 +0.7%
SENSEX 51,817 +1.3%

 

Hyundai Motor IPO Review

India’s biggest IPO is here! Hyundai Motor India’s public offer kicks off tomorrow, with a price band set at Rs 1,865—Rs 1,960 p/sh. The company aims to raise Rs 27,870 cr from the IPO.

 
Hyundai Motor IPO Review

Hyundai is India’s second-largest passenger vehicle maker, with a ~15% market share as of FY24. In the high-growth + high-margin utility vehicle segment, its volume share is 63% vs the industry average of 60%. Around 24% of its overall topline also comes from exports, which is a big growth channel.
 

Read This Also: New Income Tax Rules: 60% Tax on Large Cash Deposits – What You Need to Know!

FYI – this IPO is purely an ‘Offer for Sale’, which means none of the proceeds will come into the company. PS – this does not mean Hyundai has no plans to invest in India; it actually has Rs 32,000-cr in capex lined up over the next decade.

 

 

FY24 Snapshot:
  • Revenue: Rs 69,829 cr; +16% YoY
  • EBITDA: Rs 9,133 cr; +21% YoY
  • EBITDA Margin: 13.1% vs 12.5% YoY
  • PAT: Rs 6,060 cr; +29% YoY
Big Picture: Let’s get the negatives out of the way. Yes, like all companies with foreign parents, it paid out a massive dividend in FY24 (Rs 10k cr +). 
It also recently upped its royalty rate to 3.5% of sales and can increase it to 5% without shareholder approval. Finally yes, its proposed valuation is several times more than its parent. But that doesn’t mean it’s all bad.
A 26-27x P/E is decent considering the Indian auto market’s growth outlook. Experts believe Hyundai’s future will depend on two big triggers. First, how quickly it can expand capacity.
It’s currently in the process of going from 8.25 lakh to 11 lakh units. The second is its EV push. We’re getting the Creta EV in Q4FY25 and we’ll see whether it can take on the Tata Nexon.
Most experts say to subscribe for the long term and expect decent returns. Grey market data suggest its potential listing gains have crashed in recent days and may list only at a 3% premium.

 

Are you applying for the IPO?
YES
NO

 

Earnings Roundup

DMart (-9%) was the top NSE 500 loser after its Q2 results missed all Street estimates! Increased competition + weak demand across retail categories resulted in its slowest topline growth in four years. 

 

Read This Also: Hyundai Motor India IPO: Price Band, Subscription Dates & Listing Details

 

FYI – the firm’s ‘like-for-like growth, a key metric, came in at 5.5% YoY, the slowest in three years. Finally, increased operating expenses, which were aimed at improving service quality, also took a small hit on margins, which in turn limited bottom-line growth.

Here are its key stats:

  • Revenue: Rs 14,444 cr; +14% YoY (vs Est: Rs 14,597 cr)
  • EBITDA: Rs 1,094 cr; +9% YoY
  • EBITDA Margin: 7.6% vs 8% YoY
  • PAT: Rs 649 cr; +6% YoY (vs Est: Rs 812 cr)

Big Picture: After hedging like crazy, the cat is finally outta the bag. CEO Neville Noronha admitted that: “We see the impact of online grocery formats including DMart Ready in large metro DMart stores”. 

 
There’s a lot to unpack here. First off, Zomato’s Blinkit and Swiggy’s Instamart are hurting urban DMart stores. PS – we red-flagged this in our newsletter over a week ago. 
 

Secondly, Avenue Supemart’s quick service (Dmart Ready) is eating into store revenue. That is OK in the long run but may cause some discomfort in the short run.

The real question is whether this is a structural hit to DMart’s long-term growth projections or if it’s a temporary blip. 

 
Experts are divided too. JP Morgan is the big bear, downgrading the stock and cutting its target price to Rs 4,700 p/sh vs Rs 5,400 p/sh earlier. For the strong believers, SEBI RA Vipul Ramaiya says the stock will see a “major support zone” near Rs 4,000 and you can add more at that mark with a 1-2 years investment horizon.
 
What’s your view on the stock?
BULLISH
BEARISH
NEUTRAL

 

Chartbusters

Here are three companies that saw big movements today!

1) Wipro (+4%) was the top Nifty gainer after announcing a bonus issue. This is the first issue since 2019 when it gave one bonus share for every three shares held. 

 

 

Wipro Share Price
Wipro Share Price 

 

 

Fun fact: Out of all public companies, Wipro has issued the MOST number of bonus shares to its shareholders in its history; a whopping 13 times since 1971. Either way, this is good news for shareholders waiting for the IT revival to really take off.

2) IEX cracked -6% intraday after power coupling fears once again raised their head! 

 

 

IEX (INDIAN ENERGY EXCHANGE) SHARE PRICE
IEX (INDIAN ENERGY EXCHANGE) SHARE PRICE

 

FYI – Power Secretary Pankaj Agarwal said that work is “under progress” and the GOI remains committed to the same. Once again, we have no concrete details on a timeline, but this remains a huge overhang. Expect this to continue until we get clarity.

3) Bajaj Housing Finance fell after the one-month lock-in period for its shareholders ended. ICYMI – Nuvama had estimated that 12.6 cr shares (2% equity) became eligible for trading today, although it’s unclear how many of those shares were sold. More importantly, the stock is now officially below its listing price of Rs 150 p/sh.

 

 

Bajaj Housing Finance
Bajaj Housing Finance

 

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