Hyundai Motor Co. is on track to set a new record for the largest IPO in India, adding fuel to an already gravity-defying market. The Korean carmaker’s India unit, Hyundai Motor India Ltd., has started accepting orders for its upcoming $3.3 billion IPO in Mumbai. It will be the world’s second-largest public offering this year, after only Lineage, a cold-storage warehouse company that raised $4.4 billion in New York in July. Hyundai is seeking a $19 billion valuation for its India unit, making it roughly 40 percent of Hyundai’s total market cap. Trading will begin on the Bombay Stock Exchange and the National Stock Exchange on Oct. 22.
Hyundai, India’s second-largest carmaker (behind Maruti Suzuki) with a 15 percent market share, plans to use the IPO proceeds to boost production in the world’s third-largest auto market.
India’s IPO market has reached an all-time high, with 260 companies raising $9 billion in 2024 thus far. This continues a strong streak that started last year, when 223 companies were listed in India compared to just 154 in the U.S.
Alongside Hyundai, India is gearing up for two more blockbuster IPOs: Swiggy, a food delivery platform, and Vishal Mega Mart, an online retailer for groceries and household goods. Both companies are homegrown, reflecting India’s booming startup ecosystem, now boasting the third-highest number of unicorns globally. Combined, Swiggy and Vishal Mega Mart’s IPOs are expected to raise around $2 billion.
Hyundai’s India IPO is expected to rain $40 million in fees into investment bankers’ pockets, adding to the paychecks of Indian financiers who now outearn their counterparts in Hong Kong by 4.5 percent and Singapore by 7.7 percent in base pay, according to Bloomberg. In Mumbai and GIFT City—a free trade zone city in Gujarat—bankers are also seeing their salaries increase by 10 percent, faster than rival financial hubs.
While India’s market is brimming with excitement, its IPO proceeds remain a fraction of the U.S. because Indian companies operate in a smaller economy with less wealthy consumers. Most Indian IPOs raise less than $50 million. In the first half of 2024, 82 companies raised $17.6 billion on U.S. stock exchanges—a fraction of the 2021 IPO frenzy where 2,436 companies raised a total of $460 billion. In contract, India, even at its IPO peak in 2021, saw63 companies raise $15.4 billion.
Fueling India’s IPO frenzy is a booming stock market. In May, India’s publicly traded companies crossed a collective $5 trillion valuation, making the nation’s stock market the fourth largest in the world, after adding $1 trillion in just six months. These valuations are sometimes disconnected from underlying fundamentals, however: 300 Indian companies had declining revenue for two consecutive financial years, yet 216 of their stock prices rose in the 12 months ending May, according to CNBC.
Indian equities are currently the most expensive in the world by price-to-earnings ratio, hovering around 26.89, slightly higher the U.S.’s 26.37. Indian investors are engaged in record levels of speculative trading, with 84 percent of all future and options contracts being executed in the country during the first quarter of this year.
