Hyundai Motors is set to gain momentum in the Indian market with its planned $3 billion IPO, marking its first such listing outside of South Korea. This move will not only help the carmaker expand its presence in one of the world’s fastest-growing markets but also address the “Korea discount” that has been suppressing the value of its business back home.
India, being the second-largest carmaker after Maruti Suzuki with a 15% market share, presents immense opportunity for Hyundai. The IPO is aimed at accelerating its expansion in a country where it has been operating for over 25 years and where its affordable cars are popular with price-conscious consumers.
Moreover, the IPO will reduce Hyundai’s dependence on its parent company for funds, providing the financial muscle to take on local rivals such as Tata and chart its own growth plans in a market that accounts for 14% of total global sales.
The proceeds from the IPO are expected to largely fund the launch of electric vehicles (EVs) in India, the establishment of a charging network and battery facility, as well as the expansion of its manufacturing capacity. This aligns with Hyundai’s vision to capitalize on the increasing demand for EVs in India.
With India’s stock markets experiencing significant growth, Hyundai seeks to leverage this trend and address the “Korea discount” phenomenon, which has been limiting the valuations of South Korean companies compared to global peers. By considering a valuation of $30 billion for the India unit IPO, Hyundai aims to boost valuations at home, thereby closing the valuation gap. However, some analysts remain skeptical about the ease of resolving the “Korea discount” issue.
The IPO in India represents a strategic move for Hyundai, as it not only signals its commitment to the Indian market but also lays the foundation for exponential growth and a stronger brand presence in the region.
