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Hyundai Motor India, the country's No.2 carmaker by market share, reported a 16.5% decline in quarterly profit due to lower domestic sales and as Red Sea disruptions hurt exports, its first earnings report since listing showed on Tuesday.

The company's shares fell nearly 3% before recovering to trade down about 1% in late afternoon trading.

Hyundai, which makes the 'Creta' SUV, said its standalone profit dropped to 13.38 billion rupees ($158.6 million) in the second quarter ended Sept. 30, from 16.02 billion rupees a year earlier.

Hyundai, whose 15% market share trails only Maruti Suzuki's 41%, said weak demand in India led to a 6% drop in domestic sales, while exports fell 17% due to disruptions around the Red Sea.

Houthi rebels have been attacking ships on the Red Sea since late 2023, which has severely hurt global supply chains and trade as vessels are diverted around Africa's Cape of Good Hope.

On the domestic front, India's car sales from July to September dropped for the first time in 10 quarters, dragged by poor demand for small cars and slowing growth for some SUV manufacturers, including Hyundai and Maruti.

Last month, Maruti, which mostly sells small cars, reported its slowest quarterly revenue growth in nearly three years.

Hyundai's overall revenue fell 7.5% to 169.61 billion rupees in the quarter as sales volumes, including exports, dropped about 9% in the quarter.

SUV sales, which form about 60% of Hyundai's volumes, dipped 0.5%.

The company, which went public in October following a $3.3 billion IPO that was the country's largest ever, said it expects sustained demand momentum for cars in the mid to long term. ($1 = 84.3800 Indian rupees)