Nomura and Macquarie initiate coverage on Hyundai Motor India even before its listing; see up to 26% potential gains

Ahead of the listing of the country's largest issue by size- Hyundai Motor India (HMIL), global brokerages have initiated their coverage on the stock. The issue turned out to be successful and garnered 2.37 times the total subscription, with Qualified Institutional Buyers (QIBs) leading the subscription rate at 6.97 times.

The Rs 27,870 crore issue was a complete offer for sale (OFS)n with 142.2 million shares on offer. Post the issue, promoter shareholding in the company will be reduced to 82.5 per cent.

Global brokerage Nomura has initiated a buy on the stock with a target pegged at Rs 2,472 per share. The suggested target implies an upside of over 26 per cent. As per the brokerage, Hyundai Motor India is riding on technology and style. Furthermore, it believes the ongoing premiumization should drive high-quality growth for the stock.

The brokerage envisages long runway for the Indian car industry –with current penetration rate at 36 cars per 1,000 people. Nomura expects the company to deliver 8 per cent volume CAGR over FY25-27F driven by 7-8 new models (including facelifts) & its EBITDA margins to improve to 14 per cent by FY27F from 13.1 per cent in FY24; led by improving mix, cost reduction & operating leverage.

Meanwhile, another brokerage Macquarie has also initiated its coverage on the stock with an 'outperform' rating and a target of Rs 2,235, implying over 14 per cent gains over the issue price.

Due to its favorable portfolio mix and premium positioning, the brokerage believes HMIL deserves to trade at a premium price to earnings (P/E) multiple versus peers. Furthermore, it sees powertrain optionality, including parent capabilities and market share upside risk from new models and powertrain launch as medium-term positives for the company.

The company's stock is set to debut on the bourses today, October 22, 2024.

Also Read: Why Anil Singhvi suggested to avoid Hyundai Motor IPO?

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