Emkay Global has kept its 'Buy' rating on Hyundai Motor India but reduced the target price to ₹2,300. The revision follows lowered earnings forecasts for the coming years due to macroeconomic headwinds and cost pressures. Despite these challenges, the company is prioritizing SUV portfolio growth and production expansion for key models.
Emkay Global Financial has maintained its 'Buy' recommendation for Hyundai Motor India but adjusted the price target downwards from ₹2,600 to ₹2,300. This change follows a revision in the firm's earnings estimates for fiscal years 2027 through 2029. Analysts have cited broader macroeconomic risks, such as volatile interest rates and fuel costs, as reasons for the more cautious valuation approach, which includes moving the target multiple from 26x to 24x.
In its recent quarterly performance, Hyundai Motor India reported a 19% year-on-year revenue increase. This top-line growth was supported by a 15% rise in sales volumes and a 3% sequential improvement in average selling prices. However, profitability remained under pressure, with EBITDA falling 19% compared to the same period last year. This dip was largely attributed to persistent commodity costs and geopolitical instability. Despite these difficulties, the company achieved a 30-basis-point sequential improvement in its operating margin, indicating some resilience in its cost-management efforts.
The company’s strategic outlook is centered on expanding its presence in the SUV segment. Hyundai Motor India plans to increase the annual production run rate for the Creta and Bayon models to approximately 250,000 units, a notable jump from the current Creta-specific volume of roughly 170,000 units. To bolster this portfolio, the company is preparing to launch a new electric SUV in early 2027. Management has also set a long-term goal to reach industry-standard electric vehicle penetration levels by the end of the 2028 fiscal year.
To navigate ongoing pressure on profit margins, the company is relying on a combination of aggressive cost-reduction programs, price hikes, and available state incentives, such as those provided by the Tamil Nadu government. Management has projected domestic volume growth between 8% and 10% for the second half of the fiscal year, aiming to outperform industry trends.
For investors, the key monitorables will be the actual execution of the production ramp-up for the new vehicle platforms and the company's ability to protect margins in a volatile commodity price environment. The ability to manage costs effectively while scaling up production will be central to the company’s performance in the coming quarters.