ICICI Securities Initiates 'Buy' Rating for Hyundai India
ICICI Securities has started coverage on Hyundai Motor India Ltd. (HMIL) with a 'Buy' recommendation and a target price of Rs 2,150. This target is based on a 25x FY28 earnings multiple, suggesting the firm sees upside potential. ICICI Securities views HMIL's strong backing from its global parent as a key advantage, offering access to new auto trends, a broad product range, and research support vital in the fast-changing auto market. While HMIL has historically benefited from the trend towards more premium vehicles in India, it has faced significant market share loss in recent years, especially in the utility vehicle (UV) segment. This decline is largely due to intense competition and a heavy reliance on its popular Creta model.
Intense Competition and Market Share Challenges
The Indian passenger vehicle market is highly dynamic, with SUVs now making up nearly 50% of all sales. Although HMIL's Creta SUV had record annual sales exceeding 200,000 units in 2025 and maintained over 34% of its mid-size segment, the wider competition is tough. Maruti Suzuki leads the market with about 40.6% share in FY25. Tata Motors has risen to become the second-largest passenger vehicle maker in Q3 FY26, boosted by models like the Nexon. Mahindra & Mahindra also has a strong presence, particularly in the SUV sector. HMIL's domestic market share has dropped to 11.5% in Q3 FY26 from 14.6% in Q1 FY25. Even the Exter compact SUV, after initial promise, has seen sales slow down, ranking 19th among UVs in 2025. The Verna sedan has also faced significant year-on-year sales drops in the domestic market over recent fiscal years.
Strong Exports and Aggressive New Product Rollout
Despite domestic market pressures, Hyundai Motor India has used its manufacturing strength to become India's largest passenger car exporter. In Q3 FY26, exports made up around 25% of total sales, showing a 21% increase year-on-year. HMIL plans to raise this export share to 30% of production by FY30. To tackle domestic challenges and win back market share, HMIL is planning an aggressive product rollout. This includes 26 updates and seven new models between FY26 and FY30, aiming to fill gaps and expand in key areas. The company expects SUVs to make up over 80% of its offerings by FY30. It also intends to launch its luxury Genesis brand in India by 2027, along with its first locally produced electric SUV that same year.
Lingering Concerns: Share Erosion and Strategic Risks
Even with its planned product updates, questions remain about HMIL's ability to stop its domestic market share from falling. Some analysts note that its performance trails competitors like Maruti Suzuki, which has shown better domestic sales growth and increased its market share. Relying on a few key SUV models, like the Creta and Venue, carries risks if demand weakens or competition grows in those specific areas. Moreover, HMIL's focus on premium vehicles, while good during economic upturns, could be a weakness during downturns. Limited variety in fuel types and increasing competition, as rivals like Tata Motors and Mahindra & Mahindra introduce attractive SUV models, create persistent challenges.
Market Outlook and Analyst View
The Indian auto sector is expected to grow more steadily, with passenger vehicle sales projected to increase by 5-7% in FY26 and 4-6% in 2026-27. HMIL's strategy to grow its SUV range and adopt new powertrains, which are vital growth areas, will depend on successfully competing against strong rivals. Overall analyst sentiment favors a 'Buy' rating, with average 12-month price targets generally between Rs 2,400 and Rs 2,600. This indicates that despite domestic challenges, the market recognizes HMIL's core strengths and future potential, provided it can manage the changing Indian market and leverage its export business.