A New IPO Era: Why Companies Are Flocking to List in India

Earlier this year, Hyundai Motor India, the Indian subsidiary of South Korean Hyundai Motor Company, filed for an initial public offering (IPO) in India. Market speculation suggested the company could raise as much as $3.5 billion from the offering, potentially making it the largest IPO in India's history.

India isn’t Hyundai’s biggest market, nor is it a market leader in the country. If anything, the company’s market share has declined steadily over the past five years. According to its draft red herring prospectus (DRHP), Hyundai’s market share dropped to 15% in the financial year ended March 2024 (FY24), down from over 17.5% in FY20.

Still, Hyundai chose to list its subsidiary in India in its quest to unlock value. Despite being one of the world’s largest and most competitive automobile makers, Hyundai has underperformed in terms of valuation. For instance, its price-to-earning ratio stands at 4.64, significantly lower than major competitors such as Toyota, Ford, and Honda.

Historically, India has been considered a difficult environment for public listings due to limited investor education, economic volatility, and regulatory obstacles. However, Hyundai opted to list in India despite the availability of the US, its largest market, as an option. Companies like Toyota, Nissan, and Honda have previously chosen US stock exchanges for secondary listings.