Hyundai Motor India Ltd had a smooth run on the margin front in the September quarter (Q2FY26), even as revenue growth remained tepid.
The automaker’s consolidated revenue rose 1% year-on-year to ₹17,461 crore, while Ebitda grew faster at 10% to ₹2,429 crore, beating Street estimates. As a result, Ebitda margin expanded 113 basis points to 13.9%, aided by a 2% decline in raw material costs, higher exports, and an improved product mix. SUVs continued to power the portfolio, accounting for a record 71% of domestic volumes in Q2.
Still, investor enthusiasm was muted. The stock was up only marginally today after Thursday’s results and remains about 17% below its 52-week high of ₹2,890, hit on 22 September. There are concerns over Hyundai’s shrinking share in India’s passenger vehicle (PV) market, even as exports surged 21.5% year-on-year in Q2, now accounting for 27% of total volumes. In contrast, domestic volumes, accounting for the rest, fell 6.8%.
“Competitive landscape in PVs has changed meaningfully in recent years, as improved SUV portfolios of Mahindra & Mahindra Ltd and Tata Motors, entry of Kia, and rising presence of Toyota, have brought market shares of top-2 OEMs, Maruti Suzuki India Ltd and Hyundai Motor India to 14 and 24-year lows respectively,” said a 30 October report by Jefferies India.
“Hyundai has lost its #2 position in Indian PVs for the first time since FY09; its market share has declined from a peak of 17.5% in FY20 to just 13.3% in H1 (fiscal first half) with losses in both SUVs and cars. It is also lagging in EVs with just 4% share in H1,” the broking firm added.
Hyundai’s management aims to increase its domestic market share to 15% by FY30 through a more aggressive launch calendar – 26 new products are planned by then – and a refreshed pricing strategy. In the near term, the launch of the Venue with ADAS Level 2 and over-the-air updates in November marks the company’s pivot towards software-defined mobility. The Talegaon plant, which is expected to come online with a capacity of 170,000 units, is also anticipated to support growth over the next decade.
Considering Hyundai’s launch pipeline, Motilal Oswal Financial Services now expects a 6% volume CAGR over FY25-28, which is largely back-ended and is likely to be boosted by 20% volume CAGR in exports.
“We now believe that higher-than-anticipated operating costs for the new Pune plant would impact earnings in the near and medium term. Overall, Hyundai Motor India is expected to deliver 15% earnings CAGR over FY25-28,” said the broking firm in a report on 30 October.
Demand tailwinds from GST 2.0 may provide a near-term boost. Hyundai’s strength in hybrid and electric vehicle (EV) technology, along with a steady tilt towards higher-margin SUVs are positive factors.
Even so, rising operating costs from the new plant and intensifying competition in the EV space pose risks. The stock trades at about 27x FY27 estimated earnings, according to Bloomberg. Valuation may appear rich amid domestic volume weakness and market share losses.
