Buy Hyundai Motor India Ltd for Target Rs 2,390 by Elara Capital
New model launches to power growth
Hyundai Motor India (HYUNDAI IN) remains a key player in India’s highly concentrated passenger vehicle (PV)market where the Top 6 companies account for more than 90% volume. After ceding the No 2 position to M&M (MM, Buy, CMP: INR 3043, TP: INR 4367) in FY26, HYUNDAI is rolling out new product plans across the domestic and exportsmarkets with two new model launches in FY27, and 26 launches by FY30, including seven new nameplates. Additionally, eight pay commission could provide an incremental demand tailwind, given HMIL’s customer mix with ~16% revenue contribution from government employees and ~44% from salaried buyers. Despite short-term industry headwinds, we expect sustained demand driven by stronglaunch pipeline, resilient exports growth,and HYUNDAI’s track record in defending market share (for e.g.,Creta).We initiateHYUNDAI with a Buy rating and a TPof INR 2,390 on 26x June’28 P/E, implying upside of 20%.
Market share recovery likely in FY28 amid new launches and capacity ramp-up:
HYUNDAI’s market share decline should bottom in FY27 and begin recovering in FY28 as new products and capacity additions come online. For the past three years, HYUNDAI’s market share fell 210bp to 12.5% in FY26, mainly due to a lack of new product launches and tougher competition in the mid-size and compact SUV segments. We expect a slight dip to 12.3% in FY27E, followed by a rebound to 12.9% in FY28E, driven by several new launches, including one ICE & one EV in FY27 and capacity ramp-up. Creta continues to remain a key product with its overall industry share rising to 4.3% today vs 3.2% in FY17, even as Creta share in the mid-size segment fell from 40% to 23% by FY26. HYUNDAI’s phased expansion at the Talegaon facility in Pune (Maharashtra) should lift total capacity to 1.14mn units by FY30E from ~1.0mn units currently, underpinning volume growth & market share recovery
Industry growth resilient despite cost pressures - tailwind:
After a strong demand rebound in H2, industry momentum has carried into the current period, despite cost pressures (YTDFY27 growth at 17.9% inclusive Telangana). Near-term headwinds include likely OEM price hikes by ~3% (our assumption) to offset sharp RM inflation and a petrol price increase (assuming 5%), which together would lift customers’ TCO per month by ~3.5% from the recent lows, which is still 4% below pre-GST cut levels. After accounting for these negatives, we estimate PV industry growth of 7%/6% in FY27E/FY28E, with HYUNDAI domestic volume growth expected at 6.5%/10.5% in FY27E/FY28E.
Exports to drive the next phase of growth:
HYUNDAI targets exports volume growth of 8-10% for FY27 despite near-term headwinds due to the Middle East crisis, which accounts for 40% of its exports volume. The new Venue commenced exports in Q4FY26, and management has confirmed plans for the Verna and the Exter – moves that should strengthen exports. Management aims to lift exports to 30% of production by FY30 (from FY26 contribution of 21%), led by new launches and wider penetration of emerging markets.
Initiate with a Buy rating and TP of INR 2,390:
We initiate on HYUNDAI with a Buy rating and TP of INR 2,390 on 26x June’28E P/E, implying upside of 20%. Our view reflects sustained industry demand despite near-term headwinds, a likely market share recovery in FY28E led by a strong launch pipeline, and robust exports growth. The stock currently trades at 22x FY28E P/E, which looks attractive.
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SEBI Registration number is INH000000933
