Hyundai Motor is exploring an IPO for its Indian unit to raise at least $3 billion as early as this year at a valuation of up to $30 billion, potentially making it the country's biggest ever stock offering, two sources said.

Hyundai Motor India is in early stage talks for the initial public offering and has held discussions with several banks, said the two sources who have been briefed on the matter.

A spokesperson at the South Korean automaker's India unit declined to comment.

At a $25-30 billion valuation, Hyundai's India operation would be valued at more than half of its market capitalisation of $42 billion in Seoul.

The company is exploring "value unlocking for its India business" through the IPO, the two sources said.

"They want to make use of India's IPO boom. India's capital markets have hardly stood out like this before compared to other countries," said one of the two people.

India's biggest IPO was the 2022 listing of its largest insurer, Life Insurance Corporation, in which it raised up to $2.7 billion.

Hyundai has held talks with investment banks JP Morgan, Morgan Stanley, Citi, and Bank of America, though no formal appointments have been made.

Bank of America declined to comment, while the other three did not respond to a Reuters request for comment.

India's Economic Times newspaper first reported Hyundai's plans for an India IPO.

Hyundai, India's second-largest car maker by sales, is now doubling down in the South Asian nation and the United States after scaling back its production in China after years of losses there and exiting Russia after selling its two Russian plants.

It entered India more than two decades ago and is the only foreign player to have become dominant alongside market leader Maruti Suzuki, while companies like Ford Motor, and General Motors, have folded their India business.

Hyundai's share of the Indian market reached a peak of nearly 20 percent mainly due to its wide portfolio of small cars and a grasp of what buyers want but is seeing growing competition from domestic players like Tata Motors, which has launched a slew of new SUVs and electric cars.

Hyundai now has about a 15 percent share of the Indian car market where it sold 567,000 vehicles in the last fiscal year.

Analysts noted that Hyundai's India unit IPO talks come amid Tesla's plan to enter India and if Hyundai's unit manages to go public in the country, it might help Hyundai better compete with Tesla in the Indian EV market in the future.

Hyundai has said it plans to invest close to $4 billion in the Indian market in parts over the next decade to launch new EVs, charging stations and a battery pack assembly unit. Part of the money is being invested in buying a former GM plant to help Hyundai expand its production.

Hyundai currently manufactures cars at its plant in the southern Indian city of Chennai which is dubbed the Detroit of Asia.