Additionally, HMI operates in a highly competitive market. Hyundai and larger peer Maruti have seen a gradual decline in volume market share over the past five years. Apart from this, the IPO price does not offer much of a valuation advantage compared to Maruti, which has almost three times the PV market share, two and a half times the sales volume and similar profitability. On the positive side, Hyundai has launched several new models on internal combustion engine (ICE) as well as electric vehicle (EV) platforms in the coming quarter. Plans to expand capacity also bode well for future growth. Given these factors, while risk-averse investors may consider an IPO, risk-averse investors may wait to see the share price trend after the IPO.
Business
Established in 1996, HMI is a manufacturer of a complete range of PVs including hatchbacks, sedans and SUVs in various powertrains. The company has a fully operational plant in Chennai with a capacity of 8,24,000 lakh units. It is currently setting up a second plant at Talegaon in Maharashtra, which once fully operational will take its total capacity to 10,74,000 units in the next three-four years.
The company’s PV sales in FY24 grew by 8% year-on-year to 7,77,876 units. Of this, ICE and CNG powertrains contributed 89.2% and 10.6% respectively while EVs contributed 0.2%. HMI’s market share in hatchback, sedan and SUV was 12.3%, 20% and 18.4% respectively in FY24.
-
Stock trading
A2Z of Stock Market for Beginners: Stock Market Course for Beginners
-
Stock trading
Introduction to Technical Analysis and Candlestick Theory
-
Stock trading
Stock Investing Made Easy: An Introductory Stock Market Investment Course
-
Stock trading
Candlesticks Made Easy: Candlestick Patterns Course
-
Stock trading
Renko chart patterns made easy
-
Stock trading
Technical Analysis Made Easy: An Online Certification Course
-
Stock trading
Options Trading Course for Beginners
-
Stock trading
Commodity Markets Made Simple: Commodity Trading Course
-
Stock trading
RSI Made Easy: RSI Trading Course
-
Stock trading
Futures Trading Made Easy: Futures and Options Trading Course
-
Stock trading
Market 103: Mastering Trends with RMI and Techno-Funda Insights
-
Stock trading
Cryptocurrency Made Easy: Cryptocurrency Course
-
Stock trading
Technical Trading Made Easy: Online Certification Course
-
Stock trading
Macroeconomics Made Easy: Online Certification Course
-
Stock trading
Markets 102: Mastering Sentiment Indicators for Swing and Positional Trading
-
Stock trading
Stock valuation made easy
-
Stock trading
A2Z of Stock Trading – Online Stock Trading Course
-
Stock trading
ROC Made Easy: A Master Course for the ROC Stock Indicator
-
Stock trading
Options Scalping Made Easy
Financial
Between FY22 and FY24, revenue grew by 21.4% YoY to Rs. 69,829 crore while the net profit increased by 44.5% to Rs. 6,060 crores. Operating margin before depreciation and amortization (EBITDA margin) increased from 11.6% to 13.1% during the period. Peer Maruti’s EBITDA margin also increased to 13.1% from 6.4% on a like-for-like basis.
risks
Owing to intense competition, the company’s PV market share has declined progressively from 17.6% in FY20 to 14.6% in FY24. This may force the company to offer more discounts to customers in the future to maintain market share, thereby affecting profitability.
evaluation
HMI calls for an FY24 price-earnings (P/E) multiple of 26.7. Closest peer Maruti trades at a P/E of 29.8.
(You can now subscribe to our ETMarkets WhatsApp channel)
