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New launches and exports to drive growth

We interacted with Hyundai's (HMI) management to understand the demand outlook for HMIL and the industry. Management indicated that retail demand continues to remain healthy for both small cars and SUVs, although compact/micro-SUVs are currently outperforming cars. For HMIL, its recently launched Venue is seeing strong demand, with an order book of 83k units and a waiting period of about 10-14 weeks. Further, HMIL has done a few interventions, such as: 1) Creta brand campaign in the Cricket World Cup to sustain its market presence in a rising competitive scenario; 2) the introduction of low-priced “Era” variant for i-20; and 3) entry into commercial mobility, which has helped improve Aura volumes. HMIL has indicated that its new launch cycle has now begun with the launch of the new Venue and it plans to launch 26 models by 2030. Management continues to be upbeat about exports and has set a target of increasing the export mix to 30% by 2030 from 25% currently. Margins may remain under pressure in the near term given the impact of start-up costs of the new Pune plant; however, an improving mix and localization, among other tailwinds, should drive up margins in the long run. We expect HMIL to post a 12% earnings CAGR over FY25-28E. Maintain BUY with a TP of INR2,567, valued at 27x Dec’27E EPS.

Domestic update

* PV industry growth momentum, which picked up after the GST cut, has remained intact even in 2026. Feb’26 retails are holding up well and HMIL expects to sustain its retail growth momentum seen in Jan’26.

* Demand continues to be strong across segments: both SUVs and cars are seeing healthy growth momentum. However, compact/micro-SUVs continue to outperform cars.

* Given healthy retail demand, dealer-level inventory remains lean at around four weeks, similar to the levels seen by Jan-end.

* First-time buyer mix has now increased to 43% for HMIL from 40% levels seen before the GST cut. First-time buyer mix has increased for compact SUVs: 47% for Exter and 48% for Venue.

* The new Venue has been well received in the market and has an order backlog of 83k units, thereby claiming a waiting period of about 10-14 weeks. Given the strong demand, the Venue has now ramped up to 11-12k units per month from 9-9.5k units for the old Venue. In fact, in Jan’26, Venue clocked its highest-ever sales of 12.5k units. Venue is currently being produced from the new Pune plant, which has a capacity of 11-12k units per month currently in two-shift operations. Based on the demand outlook, management would look to ramp up production of this model as and when required in the coming quarters.

* The Creta continues to be a strong brand despite the heightened competition in the segment and has seen its monthly run rate increase to about 17-18k units per month. Management indicated that they would continue to do product interventions in this model from time to time to keep the competitiveness of this model intact. For instance, in 2024, they had launched a mid-cycle upgrade with added advanced features and a refreshed look, which led to 20% higher volumes than the older version. Further, they had launched the EV variant of the Creta last year, which is doing about 500-600 units per month. Further, HMIL is a premium partner for the 2026 ICC Men’s T20 World Cup, which is featuring Creta in promotional campaigns. Some of the promotional activities in the Cricket World Cup around the Creta include: 1) The 2026 World Cup trophy was displayed alongside Hyundai Creta at locations like High Street Phoenix (Mumbai), Phoenix Mall of Asia (Bengaluru), and DLF CyberHub (Gurugram); 2) Customers can book a test drive of the Hyundai Creta to win tickets for the T20 World Cup. Further, as per media reports, we understand that the Creta’s nextgen upgrade is likely by 2027.

* Further, given the pick-up in car demand, HMIL has refreshed its i-20 line-up by bringing back its “Era” variant. With this, the starting price of the model has reduced by INR74k. Further, HMIL has reduced prices of Magna and Magna Executive variants by INR13k to make these more affordable to consumers.

* Further, in order to leverage the ongoing post-GST demand, HMIL marked its entry into the commercial mobility market with the launch of Aura and i-10 models. These models would target to deliver maximum uptime, predictable maintenance, and low operating costs for commercial customers. Further, to support commercial buyers, Hyundai offers extended warranty packages covering the fourth and fifth years or up to 180,000km, whichever comes first. Flexible financing options extend repayment periods up to 72 months, subject to financier approval. After this entry, its compact sedan Aura has seen monthly sales improve to ~8k units now from 5-5.5k units. They continue to see healthy demand momentum from this segment. Sales from this segment currently contribute to about 5% of its mix. Prior to this initiative, they have had a 9-10% market share in the fleet segment.

* The other key growth driver to watch out for is the implementation of the 8th Pay Commission recommendation. While the date is not known yet, this is likely to be a key growth driver for discretionary consumption. Further, given that government employees contribute to about 17% of HMIL’s domestic sales, HMIL is expected to emerge as one of the major beneficiaries of the same.

* For FY27, SIAM expects industry to grow at 5-6%. HMIL would target to capitalize on this growth momentum, supported by a healthy launch pipeline, which has started now (targets to launch 26 new products till FY30).

* HMIL is well-prepared to comply with the upcoming CAFE 3 regulations, which are scheduled to be implemented from Apr’27 (final notification expected by Mar’26). As part of its compliance strategy, HMIL is working on a multipowertrain strategy, which suits well for India. Its CNG mix has already increased to 15-16% from 10-11% earlier and may grow further, as HMIL aims to increase the number of CNG models to six by 2030 from three currently. Similarly, it has an ambitious target of ramping up its EV mix to 16-17% of sales from under 1% currently. HMIL also targets to launch eight hybrid models by 2030.

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