Hyundai Motor India Gears Up For Investment Worth Rs 32,000 Crore Ahead Of IPO, Plans To Raise Capacity

Hyundai Motor India Ltd (HMIL) is creating buzz as it prepares for its highly anticipated stock market debut on October 22. The Indian arm of the South Korean automotive giant has not only charted a bold growth strategy but has also earmarked Rs 32,000 crore investment to expand its presence in the country between 2023 and 2032. This investment will focus on capacity expansion, product and platform development, and the launch of new models, with a special emphasis on capturing a larger share of the Battery Electric Vehicle (BEV) market.

HMIL's growth blueprint is centred around its manufacturing capabilities, as demonstrated by its partnership with key state governments. According to the company's Red Herring Prospectus (RHP), Hyundai has signed four memoranda of understanding (MoUs) with the Government of Tamil Nadu for its Chennai manufacturing plant and offer letters with the Government of Maharashtra for its Talegaon manufacturing plant in Pune, which is yet to begin operations. These agreements are part of Hyundai's Rs 32,000 crore investment plan across its Indian facilities.

Unsoo Kim, Managing Director and CEO of Hyundai Motor India, previously revealed that the company will allocate Rs 26,000 crore to its Chennai plant, while Rs 6,000 crore will be directed towards the development of the Pune plant. These investments are poised to boost the company's production capacity from its current 8,24,000 units per year to 1.1 million units by 2028. This increased capacity will allow Hyundai to meet rising domestic and export demand.

Kim emphasized that these capital expenditures, past and future, are primarily focused on acquiring plant, property, equipment, and intangible assets related to the launch of new passenger vehicle models. As per the company's RHP, Hyundai's investments in property, plant, equipment, and intangible assets have been substantial, totalling Rs 5,590.72 million in the three months ending June 30, 2024, and Rs 32,462.08 million in fiscal 2024 alone.

Hyundai's production targets for 2024 highlight its ambition for further growth. The company aims to produce 7,75,000 units in 2024, a slight increase from the 7,65,000 units produced in 2023. A significant part of this growth will be driven by the Pune manufacturing plant, which is scheduled to commence operations in the second half of 2025. In its first phase, the Pune plant will have a capacity of 170,000 units per annum, which will later be expanded by an additional 80,000 units, bringing the plant's total production capacity to 2,50,000 units.

Hyundai is shifting its focus to Sport Utility Vehicles (SUVs) and electric vehicles (EVs). As part of its EV strategy, the company plans to launch four battery-driven models in the medium term, catering to different segments of the market. This includes a mass-market electric vehicle, premium models, and the much-anticipated electric version of its popular Creta SUV. Hyundai is also working on localizing the production of key EV components, such as battery pack assemblies and powertrains.

Hyundai Motor India's financial performance has been on an upward trajectory, boosted by strong sales in both the domestic and export markets. For the fiscal year ending March 2024, the company recorded a total income of Rs 71,302 crore, up from Rs 61,436 crore in FY2023. Profitability also improved significantly, with a profit of Rs 6,060 crore in FY2024, compared to Rs 4,709 crore in the previous fiscal year. These financials, combined with the company's expansion plans, have positioned Hyundai as a formidable player in the Indian automotive market.

In line with its growth ambitions, Hyundai Motor India is launching the country's largest initial public offering (IPO), set to raise Rs 27,870 crore. The price band for the IPO has been fixed at Rs 1,865-1,960 per share. Public subscription will open on October 15 and close on October 17, while anchor investors are scheduled to place their bids on October 14.

This IPO is more than just a fundraising exercise for Hyundai Motor India. According to Chief Operating Officer (COO) Tarun Garg, it represents a crucial step toward aligning the company with global standards in operations, governance, and excellence. "This IPO gives us an opportunity to really pursue some global standards in terms of excellence, in terms of operations, in terms of governance. All these things are really working in favour of an IPO," Garg stated.

"The brand Hyundai has really been accepted very well in India. We have been able to appeal to the Indian people generally. This is probably the right country to really go for the IPO," Garg explained.