Automobile IPOs in India involve the public offering of shares by automotive companies, allowing investors to participate in the sector’s growth. These IPOs provide capital for expansion, innovation and market penetration while offering investment opportunities in India’s booming automobile industry.
Content:
- Overview of the Automobile IPOs in India
- IPO Fundamental Analysis
- IPO Financial Analysis
- About the Company
- Advantages of Investing in Automobile Sector IPOs
- Disadvantages of Investing in Automobile Sector IPOs
- Role of the Automobile Industry in the Economy
- How to invest in Automobile IPOs?
- Future Outlook of Automobile IPOs in India
- Automobile IPOs in India – FAQ
Overview of the Automobile IPOs in India
Automobile IPOs in India have gained popularity as the sector expands and evolves with innovations like electric vehicles. These IPOs offer investors an opportunity to tap into the growth of established and emerging companies in the rapidly changing automotive landscape.
With a growing demand for vehicles, both traditional and electric, automobile IPOs attract considerable investor interest. Companies leverage IPOs to raise capital for technology advancements, infrastructure and expanding market share, thus contributing to the broader economic growth of India’s automotive sector.
IPO Fundamental Analysis
Hyundai Motor India Limited
Hyundai Motor India Ltd’s financial results for FY24 show significant growth, with sales rising from ₹47,378 crores in FY22 to ₹69,829 crores in FY24. The company’s net profit also improved from ₹2,902 crores in FY22 to ₹6,060 crores in FY24, reflecting robust performance across key financial metrics.
Revenue Trend: Hyundai’s sales increased significantly from ₹47,378 crores in FY22 to ₹69,829 crores in FY24, reflecting a strong upward trajectory. Expenses grew from ₹41,892 crores in FY22 to ₹60,696 crores in FY24, signalling healthy business expansion.
Equity and Liabilities: Hyundai’s equity capital remained consistent at ₹812.54 crores across FY22 to FY24. Reserves saw a rise from ₹16,044 crores in FY22 to ₹19,242 crores in FY23 but dropped to ₹9,853 crores in FY24, reflecting fluctuating financial positions.
Profitability: Hyundai’s operating profit rose from ₹5,486 crores in FY22 to ₹9,133 crores in FY24, indicating strong growth. OPM % also improved from 11.44% in FY22 to 12.81% in FY24, reflecting enhanced operational efficiency.
Earnings Per Share (EPS): Hyundai’s EPS increased significantly from ₹3,571 in FY22 to ₹7,458 in FY24, showing remarkable profitability growth. This increase is a result of the company’s improved net profit and operational performance.
Return on Net Worth (RoNW): Hyundai reported a high RoNW of 39.45% in FY24, showcasing strong returns on shareholder equity. This marked a significant improvement compared to previous years, demonstrating effective capital utilization.
Financial Position: Hyundai’s total assets slightly decreased from ₹28,358 crores in FY22 to ₹26,349 crores in FY24. Current assets fell from ₹20,080 crores in FY22 to ₹16,124 crores in FY24, indicating changes in working capital management and asset allocation.
Forge Auto International Limited
Forge Auto International Ltd’s financial results for FY24 show notable growth, with sales increasing from ₹133 crores in FY22 to ₹179 crores in FY24. The company’s net profit also rose from ₹3 crores in FY22 to ₹7 crores in FY24, reflecting solid performance.
Revenue Trend: Forge Auto’s sales grew from ₹133 crores in FY22 to ₹179 crores in FY24, signalling strong growth. Expenses also increased from ₹125 crores in FY22 to ₹165 crores in FY24, highlighting business expansion.
Equity and Liabilities: The company’s equity capital decreased from ₹14 crores in FY22 to ₹8 crores in FY24. Reserves increased to ₹13 crores in FY24, while borrowings rose from ₹26 crores in FY22 to ₹40 crores in FY24.
Profitability: Forge Auto’s operating profit improved from ₹7 crores in FY22 to ₹15 crores in FY24. Operating profit margin (OPM %) increased from 5% in FY22 to 8% in FY24, reflecting better operational efficiency.
Earnings Per Share (EPS): Forge Auto’s EPS rose to ₹8.32 in FY24, up from ₹3 in FY22. This increase is driven by the significant growth in net profit, highlighting strong earnings potential.
Return on Net Worth (RoNW): Forge Auto reported a strong RoNW of 33.8% in FY24, a significant improvement from previous years. This indicates the effective use of shareholders’ equity to generate profits.
Financial Position: Forge Auto’s total assets increased from ₹57 crores in FY22 to ₹101 crores in FY24. Fixed assets grew from ₹23 crores in FY22 to ₹31 crores in FY24, reflecting capital investment in growth.
Resourceful Automobile Limited
Resourceful Automobile Ltd’s financial results for FY24 highlight strong growth, with sales increasing from ₹12.3 crores in FY22 to ₹19.32 crores in FY24. Net profit also rose from ₹0.29 crores in FY22 to ₹1.96 crores in FY24, reflecting significant improvement.
Revenue Trend: Resourceful Automobile’s sales grew from ₹12.3 crores in FY22 to ₹19.32 crores in FY24, reflecting a steady upward trajectory. Expenses rose from ₹11.57 crores in FY22 to ₹15.73 crores in FY24, indicating business growth.
Equity and Liabilities: Equity capital increased from ₹0.5 crores in FY22 to ₹2.66 crores in FY24. Reserves grew to ₹12.24 crores in FY24. Total liabilities rose from ₹10.09 crores in FY22 to ₹22.27 crores in FY24.
Profitability: Operating profit rose significantly from ₹0.73 crores in FY22 to ₹3.59 crores in FY24. Operating profit margin (OPM %) improved from 5.93% in FY22 to 18.58% in FY24, reflecting better operational efficiency.
Earnings Per Share (EPS): Resourceful Automobile’s EPS increased to ₹12.02 in FY24, compared to ₹5.8 in FY22, highlighting improved profitability and higher shareholder value.
Return on Net Worth (RoNW): Resourceful Automobile achieved a remarkable RoNW of 120% in FY24, up from the previous years, indicating excellent returns on shareholders’ equity.
Financial Position: Total assets grew from ₹10.09 crores in FY22 to ₹22.27 crores in FY24, driven by an increase in other assets from ₹9.69 crores in FY22 to ₹22.06 crores in FY24.
IPO Financial Analysis
Hyundai Motor India Limited
| FY 24 | FY 23 | FY 22 | |
| Sales | 69,829 | 60,308 | 47,378 |
| Expenses | 60,696 | 52,759 | 41,892 |
| Operating Profit | 9,133 | 7,549 | 5,486 |
| OPM % | 12.81 | 12.29 | 11.44 |
| Other Income | 1,473 | 1,129 | 587.62 |
| EBITDA | 10,606 | 8,678 | 6,074 |
| Interest | 158.08 | 142.4 | 131.91 |
| Depreciation | 2,208 | 2,190 | 2,170 |
| Profit Before Tax | 8,240 | 6,346 | 3,772 |
| Tax % | 26.45 | 25.79 | 23.08 |
| Net Profit | 6,060 | 4,709 | 2,902 |
| EPS | 7,458 | 5,796 | 3,571 |
| Dividend Payout % | 0 | 98.81 | 51.47 |
*All values in ₹ Cr.
Forge Auto International Limited
| FY 24 | FY 23 | FY 22 | |
| Sales + | 179 | 174 | 133 |
| Expenses + | 165 | 163 | 125 |
| Operating Profit | 15 | 11 | 7 |
| OPM % | 8% | 7% | 5% |
| Other Income + | 1 | 1 | 1 |
| Interest | 4 | 3 | 3 |
| Depreciation | 3 | 2 | 2 |
| Profit before tax | 9 | 7 | 4 |
| Tax % | 28% | 28% | 29% |
| Net Profit + | 7 | 5 | 3 |
| EPS in Rs | 8.32 | NA | NA |
*All values in ₹ Cr.
Resourceful Automobile Limited
| FY 24 | FY 23 | FY 22 | |
| Sales + | 19.32 | 18.83 | 12.3 |
| Expenses + | 15.73 | 17.87 | 11.57 |
| Operating Profit | 3.59 | 0.96 | 0.73 |
| OPM % | 18.58% | 5.10% | 5.93% |
| Other Income + | 0.04 | 0.54 | 0.18 |
| Interest | 0.93 | 0.76 | 0.4 |
| Depreciation | 0.1 | 0.14 | 0.13 |
| Profit before tax | 2.6 | 0.6 | 0.38 |
| Tax % | 25.00% | 31.67% | 26.32% |
| Net Profit + | 1.96 | 0.42 | 0.29 |
| EPS in Rs | 12.02 | 4.32 | 5.8 |
*All values in ₹ Cr.
About the Company
Hyundai Motor India Limited
Hyundai Motor India Limited, established in 1996, is part of the Hyundai Motor Group, the third-largest global auto OEM. It manufactures feature-rich, innovative vehicles and automotive parts like transmissions and engines, backed by the latest technology.
With a robust network of 1,366 sales and 1,550 service points, Hyundai has sold nearly 12 million passenger vehicles in India and abroad. The company’s diverse product portfolio includes models such as the Grand i10 NIOS, Creta and Ioniq 5, with offerings across sedans, hatchbacks, SUVs and electric vehicles.
Forge Auto International Limited
Forge Auto International Limited, established in 2001, is an engineering company specializing in the forging and manufacturing of complex, safety-critical components for the automotive, railway and non-automotive sectors like agriculture and hydraulic parts.
The company has experienced strong growth, with revenue rising by 27% CAGR from ₹10,951.99 lakhs in FY21 to ₹17,664.85 lakhs in FY23. Forge Auto is certified with ISO 9001:2015, ISO 14001:2015, OHSAS 18001:2007, IATF 16949:2016 and ZED GOLD, ensuring high quality, safety and sustainability standards.
Resourceful Automobile Limited
Resourceful Automobile Limited, founded in 2018, operates under the name “Sawhney Automobile” and specializes in selling Yamaha two-wheelers. The company offers a wide range of motorcycles, including commuter bikes, sports bikes, cruisers and scooters.
With two showrooms in New Delhi, Resourceful Automobile provides customers with access to Yamaha’s full range of two-wheelers, apparel and accessories. The Blue Square showroom in Dwarka and another on Palam Road showcase high-quality, diverse models and the latest offerings from Yamaha India.
Advantages of Investing in Automobile Sector IPOs
The main advantages of investing in automobile sector IPOs include the potential for high growth, diversification, industry stability and exposure to innovative technologies. These factors can provide attractive returns and mitigate risks over time for long-term investors.
- High Growth Potential: The automobile sector is experiencing strong growth, especially with the rise of electric vehicles and innovations in manufacturing. This can offer investors substantial returns as demand for advanced vehicles continues to increase.
- Diversification: Investing in automobile sector IPOs provides exposure to a different sector, helping diversify an investment portfolio. It allows investors to balance risk across industries while gaining from the potential of a growing market.
- Industry Stability: The automobile industry, particularly in emerging markets, is crucial to economic growth. Established companies and government incentives for electric vehicles contribute to the sector’s long-term stability, offering investors a relatively safer option.
- Exposure to Innovative Technologies: Automobile sector IPOs often involve companies focusing on cutting-edge technologies like electric vehicles (EVs) and autonomous driving. Investors can benefit from these technological advancements and potentially secure higher returns as these technologies revolutionize the industry.
Disadvantages of Investing in Automobile Sector IPOs
The main disadvantages of investing in automobile sector IPOs include market volatility, high capital expenditure, regulatory challenges and intense competition. These factors can lead to unpredictable returns, increased risks and long-term uncertainty for investors.
- Market Volatility: The automobile industry is sensitive to macroeconomic factors such as fuel prices, interest rates and geopolitical tensions. This volatility can cause sharp fluctuations in stock prices, making it challenging for investors to predict short-term returns.
- High Capital Expenditure: Automobile manufacturers typically require significant capital for research, development and manufacturing. High expenditure can strain a company’s finances, leading to lower profit margins and a potential slowdown in growth, affecting investor returns.
- Regulatory Challenges: The automobile sector is subject to stringent environmental and safety regulations. Compliance costs and changing government policies, such as emission norms, can impact company profitability, leading to potential regulatory risks for investors in this sector.
- Intense Competition: The automobile industry is highly competitive, with numerous players vying for market share. This intense competition can reduce profit margins and hinder growth, especially for new entrants, presenting risks for investors looking for stable returns.
Role of the Automobile Industry in the Economy
The automobile industry plays a crucial role in the economy by contributing to employment, manufacturing output and trade. It generates millions of jobs across various sectors such as manufacturing, retail and services, boosting overall economic activity.
Additionally, the sector drives technological advancements and infrastructure development, influencing economic growth. It fosters innovation through the development of electric vehicles (EVs), self-driving cars and fuel-efficient technologies, contributing to a sustainable and competitive economy.
How to invest in Automobile IPOs?
To invest in Automobile IPOs, follow these steps:
- Open a Demat and Trading Account: Choose a brokerage platform like Alice Blue.
- Research IPO Details: Review the company’s prospectus, pricing and performance.
- Place Your Bid: Log in to the brokerage account, select the IPO and bid as per your preferences.
- Monitor and Confirm Allocation: If allocated, your shares will be credited to your Demat account after listing.
Future Outlook of Automobile IPOs in India
The future of automobile IPOs in India looks promising, with increasing investor interest due to the sector’s robust growth. The shift towards electric vehicles (EVs), government initiatives for sustainability and rising demand for innovative automotive solutions are expected to fuel IPO activity.
As the industry evolves with advancements in technology, infrastructure and consumer demand, automobile companies are likely to tap the capital markets for expansion. IPOs in this sector are expected to attract significant investments, offering opportunities for long-term growth and enhancing the market’s overall competitiveness.
Automobile IPOs in India – FAQ
An automobile IPO (Initial Public Offering) is when an automobile company offers its shares to the public for the first time, allowing investors to buy a stake in the company. It helps the company raise capital for expansion and growth.
Major automobile companies in India that have launched IPOs include Hyundai Motor India Limited, Forge Auto International Limited and Resourceful Automobile Limited. These companies have made their shares publicly available, contributing to the growth of the Indian automobile sector.
Automobile IPOs in India play a significant role by attracting investment, enhancing market liquidity and boosting investor confidence in the sector. They provide companies with capital for expansion while offering investors opportunities to participate in the growing automobile industry.
The largest automobile IPO in India was that of Maruti Suzuki India Ltd in 2003. It raised approximately ₹1,800 crores, marking a significant event in the Indian stock market by setting a new standard for IPOs in the automobile sector.
To invest in automobile IPOs, you can apply through a brokerage platform like Alice Blue. Open a trading and Demat account, select the IPO and place an order during the subscription period. Ensure sufficient funds are available for bidding.
Automobile IPOs can be suitable for long-term investment if the company shows strong growth potential, solid market positioning and stable financials. However, investors should assess the market and the company’s performance before making long-term commitments.
Automobile IPOs can be profitable, but their success depends on the company’s growth, industry trends and market conditions. Investors should carefully analyze financials, product offerings and competitive advantages before investing to ensure potential profitability.
Yes, India is witnessing a growing interest in automobile IPOs as the industry expands. However, specific upcoming IPOs depend on the companies’ readiness. Keep an eye on financial news and updates for announcements about upcoming automobile IPOs.
Detailed reviews and analyses of automobile IPOs can be found on financial news websites, brokerage platforms like Alice Blue and investment research platforms. They provide comprehensive insights into the company’s financials, industry trends and investment potential.
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Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.
