Hyundai India’s stock market journey has been BITTER > sweet.
Its IPO last month was a total letdown. Yeah, monthly sales looked promising — especially since other carmakers were struggling.
But the results are out and the news for Hyundai’s not pretty. Its profits fell 17% in the last quarter, pushing the stock further into negative territory.
The bitter
This is not the start India’s second-biggest carmaker wanted by any stretch of the imagination, especially when the country’s in the middle of an IPO boom and listings by companies with less than 10 employees have soared into double digits.
To be fair, Tata Motors and Maruti Suzuki are also facing a slowdown. But Mahindra is not. Is there a pattern here? The fewer SUVs a car company has in its lineup, the worse its slowdown?
That’s what it looks like on the surface. Hyundai’s Creta is the biggest selling SUV in India but it still hasn’t helped the Korean carmaker.
The sweet
It’s not all bad though…
- Hyundai has a better profit margin than market leader Maruti.
- Its product portfolio covers roughly 87% of India’s total passenger vehicle addressable market for this year.
- The stock trades at a price-to-earnings of 24.6, making it slightly cheaper than the sector at large.
- That’s why Indian brokerage Motilal Oswal has a “buy” rating for Hyundai India with a target price of 2,345 rupees ($28).
Unsoo Kim, Hyundai India’s MD, says the Indian auto market is very cyclical, suggesting the carmaker expects demand to bounce back.
Japanese brokerage Nomura says in a note that Hyundai India deserves more premium than Maruti. The slowdown in Indian car sales means that carmakers might have to tweak their products mix, Nomura says, but it has retained its “buy” rating for Hyundai too and sees its stock reaching 2,472 rupees.
Road ahead
Can Hyundai bank on the Creta alone? Maybe not.
While the SUV’s been a hit since its 2015 launch, the EV version has yet to make its debut. Meanwhile, other Hyundai models like the Exter and Venue haven’t quite matched the Creta’s impact, and sibling brand Kia is snagging its own chunk of the SUV market, creating some in-house competition.
Let’s not forget heavyweights Maruti and Mahindra are set to launch their own electric SUVs to compete with a Creta EV.
Come 2025, the SUV market in India is about to get electrified. And if Tesla enters the scene? That would be a shock the competition might not be ready for.
