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19 Nov 2024
Hyundai Motor India Ltd.'s upcoming share sale, anticipated to be one of India's largest, could significantly enhance the valuations of the country's thriving automakers. Bloomberg News previously reported that the listing might value the South Korean carmaker's Indian unit at $25 billion, positioning it as the fourth-largest automaker in India by market value—a positive sign for the sector, according to analysts.
Deven Choksey, managing director at DRChoksey FinServ Pvt., remarked that Hyundai's IPO would elevate the sector's valuation, highlighting India's appeal in global auto sourcing. The implied valuation for the IPO, based on the company’s most recent annualized profit, is approximately 25 times earnings, comparable to Maruti Suzuki India Ltd.’s one-year forward estimated earnings. Meanwhile, Tata Motors Ltd., owner of Jaguar Land Rover, trades at about 15 times earnings, suggesting potential for growth.
This year, local auto stocks have surged by nearly 40%, adding $70 billion in market value, vastly outpacing the country’s equity benchmark. The increase is driven by rising demand for new vehicles in the world's fastest-growing major economy. Choksey noted that another global player in the Indian market would attract more significant funds and higher allocations to the auto sector.
Optimism about the industry's sales outlook has been bolstered by Hyundai's focus on electric vehicles. The IPO filing suggests that the share of EVs in India could increase nearly nine-fold to 20% by 2029. Established players like Mahindra & Mahindra and Tata Motors are also concentrating on EVs.
Abhishek Banerjee, CEO of Lotusdew Wealth and Investment Advisors, mentioned that consumers seeking lifestyle upgrades would sustain demand for such products. He added that the demand for electric and hybrid vehicles would continue to drive share prices higher.
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