Hyundai Motor India IPO Valuation Analysis

• Our base case valuation of Hyundai Motor India is market cap of US$18.6 billion, based on P/E of 24.4x our estimated net profit of 64.1 billion INR in FY25.

• There have been some increasing concerns about Hyundai Motor India paying out higher royalty to its parent Hyundai Motor and dividend to shareholders, which could lower profit.

• According to a recent article by livemint, the expected valuation of Hyundai Motor India has fallen to about USD16 billion to USD20 billion.

Photo by Martin Jernberg on Unsplash

Comparable Companies Valuation Analysis

To value Hyundai Motor India, we used the following companies as comps including Tata Motors Ltd (TTMT IN), Maruti Suzuki India (MSIL IN), Mahindra & Mahindra (MM IN), and Bajaj Auto Ltd (BJAUT IN).

Our base case valuation of Hyundai Motor India is implied market cap of US$18.6 billion which is based on P/E of 24.4x our estimated net profit of 64.1 billion INR in FY25. Our target P/E multiple of 24.4x is 10% premium to the average P/E of the comps (22.2x).

One of the main reasons why we used higher valuation premium versus the comps is due to higher recent sales growth of Hyundai Motor India relative to the comps. Hyundai Motor India is expected to have average annual sales growth of 21.7% in FY23 and FY24, higher than the 16.5% for the comparable companies. Our valuation analysis suggests an implied market cap valuation ranging from USD15.1 billion to USD22.5 billion.