Hyundai Motor India new launches and exports support second-half growth

Investment View and Valuation

Motilal Oswal Financial Services retains its Buy view on Hyundai Motor India (HMIL), supported by the upcoming product-launch cycle, export order backlog and the company’s favourable SUV exposure. The broker expects around 9% volume CAGR during FY26-FY28E, including 12% export volume CAGR, and around 16% earnings CAGR.

HMIL is viewed as well placed to benefit from premiumisation, with SUVs accounting for 68% of the FY26 mix. Hyundai holds a 33% share of mid-size SUVs, 19% of compact SUVs, 20% of compact sedans and 16% of premium compact cars.

The Rs 2,334 target price is based on 26 times FY28E EPS. Motilal Oswal considers the stock attractive at 29.7 times FY27E EPS and 22.6 times FY28E EPS.

Q1 FY27 Operating Performance

HMIL reported broadly in-line Q1 FY27 operating performance. Revenue was flat year-on-year at Rs 16,334.6 crore as total sales volume declined 1.3% to 178,100 units, although realisations improved 1% year-on-year.

Domestic volumes grew 5.4% to 139,400 units, with April-May sales up 13% year-on-year. However, a fire at a supplier facility constrained June vehicle production and prevented the company from fully meeting demand. Exports declined 19.6% year-on-year to 38,708 units, affected by the supplier disruption and the Middle East geopolitical crisis.

Q1 FY27 EBITDA was broadly in line with Motilal Oswal’s estimate, while the 9.3% EBITDA margin was above the broker’s 9.0% estimate but 400 basis points below the prior year. Margin pressure reflected lower volumes, loss of higher-margin Creta volumes, adverse product mix, geopolitical effects on exports, commodity inflation of around 200 basis points year-on-year and Pune plant capacity-stabilisation costs.

Reported PAT was ahead of estimates primarily because other income was higher than expected and depreciation of Rs 557.1 crore was lower than expected.

Second-Half Growth Outlook

Management reiterated guidance for 8-10% year-on-year growth in both domestic volumes and exports in FY27. It expects a stronger second half, aided by normalisation of production, two new model launches, higher Venue volumes after the Pune plant’s third shift begins in October 2026 and higher fleet sales.

New Models and Domestic Recovery

The festive-season mid-size SUV will have technology-first positioning versus Creta. The second launch is a mass-market dedicated EV designed for high localisation and potential PLI eligibility. Management expects the new launches to aid market-share recovery and realisations, with low or negligible initial discounts. Chennai Plant 1 utilisation should also improve as the models ramp up.

Rural volume rose 23.2% year-on-year in Q1 FY27. Management expects continued rural support from network expansion, mobile service vans, road infrastructure and SUV penetration.

Export Recovery and Capacity Ramp-up

Management expects exports to accelerate from Q2 FY27 through Middle East recovery, Central and South American momentum, Venue exports and wider availability of Exter left-hand-drive and Verna powertrain variants. It expects quarterly exports to exceed the approximately 48,000-unit level achieved in Q1 FY26.

Export mix is a potential realisation lever because SUVs represent only around 13-14% of exports versus around 70% domestically. Recovering Middle East volumes should also improve mix through greater Verna and automatic-model sales. The Pune third production line is expected to produce around 14,000-15,000 units a month when fully operational.

Margins, Regulations and Earnings Estimates

Management retained FY27 EBITDA margin guidance of 11-14%, expecting volume recovery, better mix, launches, lower discounts and utilisation gains to offset current pressure. It expects compliance with CAFE II through FY27 without a penalty, while preparing for CAFE III.

Key Risks and Execution Sensitivities

• Commodity inflation
• Production disruptions
• Middle East geopolitical conditions
• Product-mix weakness
• Regulatory compliance costs
• Timing of EV PLI administrative approval