Hyundai Motor India poised for sustained growth in FY24 bottomline

Hyundai Motor Group's Executive Chair Euisun Chung visited India for an in-depth review and engaged in detailed discussions on the group's mid to long-term strategies in the country

Hyundai Motor India Limited (HMIL), which has filed for an IPO this year, concluded FY23 with revenues amounting to Rs 60,000 crore and profits reaching nearly Rs 4,710 crore, which is the highest among unlisted car manufacturers in the country.

As per industry analysts, the company is on course to earn record growth in its net profits during FY24 on the back of higher average selling price (ASP) of its bestselling models such as the Creta, Venue, Verna, etc.

As per the Draft Red Herring Prospectus (DRHP) reviewed by Moneycontrol, the company’s consolidated net profit stood at Rs 4,709.25 crore in the fiscal ended March 31, 2023. This is a 62.3 percent jump from Rs 2,901.59 crore last year. The DRHP also stated that its profit stood at 4,382.87 crore during the April-December period of FY24.

The company's revenue from operations increased to Rs 60,307.58 crore in FY23 as against Rs 47,378.43 crore in FY22, as per the same DRHP. During the April-December period of last fiscal, the company’s turnover was Rs 52,157.91 crore.

The South Korean carmaker’s Indian arm has also witnessed consistent growth in its earnings before interest, tax, depreciation, and amortization (EBITDA) margin since FY 2020-21. The company's operating profit margin was at 10.4 percent, 11.6 percent, 12.5 percent and 12.7 precent during FY21, FY22, FY23 and FY24 (9 months), respectively.

A Hyundai Motor India spokesperson declined to comment on the company’s financials.

“We sell passenger vehicles and parts in India and outside India. Our business therefore depends on general macroeconomic and demographic factors in India and outside India which are beyond our control. In particular, our revenue and profitability are strongly correlated to user discretionary spending, which is influenced by general economic conditions, unemployment levels, the availability of discretionary income and consumer confidence," HMIL mentioned in its DRHP.

Hyundai India also stated that as it is incorporated in India and derives a substantial portion of its revenue from operations from the domestic market and all of its assets are located in India, it is particularly vulnerable to factors that may adversely affect the Indian economy, as per the DRHP.

As per business intelligence company Altinfo, the company's revenue would be around Rs 70,000 crore of topline during FY 2023-24

“Hyundai Motor India's sustainable profits and higher PAT than peers stem from its well-diversified product portfolio catering to various segments with attractive designs and competitive pricing, growth in its exports portfolio, strong brand equity fostering customer loyalty, localisation efforts reducing manufacturing costs through local sourcing and product development, efficient capacity utilization. It's future looking approach by focusing on electric vehicles and technological advancements positions has also helped," said Mohit Yadav, Director, Altinfo.

The South Korean carmaker claimed that the average selling price between fiscals 2019 and 2023 increased at a CAGR of 7-8 percent due to “premiumisation trend” as well as sharp rise in vehicle prices. Further, there has been a major shift in customer preference with the launch of compact and mid-size SUVs. The company claimed that the rise in penetration of digital technologies and safety features in the vehicles also aided this ASP growth.

“In line with this trend, the contribution of passenger vehicles with ex-showroom ASP of greater than Rs 10,00,000 to our domestic sales has been increasing from 32.37 percent in fiscal 2021 to 48.71 percent in fiscal 2023 and was 49.23 percent in the nine months ended December 31, 2023,” the company said in the DRHP.  It also mentioned that the share of car priced above Rs 15 lakh nearly doubled since FY 2021 to 15.65 percent in FY23 (April-December period).

As per industry observers, the company is making best use of post-covid surge in sales and this growth will not be continuous. However, investors will buy into growth story and pay premium, they noted.