Reduce Hyundai Motor India; target of Rs 1750: Emkay Global Financial

Emkay Global Financial's research report on Hyundai Motor India

Hyundai Motor India (HMIL) logged a soft quarter, with revenue/EBITDA down 8%/10% YoY, respectively; EBITDA margin declined by 70bps QoQ to 12.8% on lower volumes and higher discounts. HMIL has guided to a low-single digit PV industry growth on a high base and a challenging demand scenario. HMIL has established a strong franchise in India; but lack of major launches (key growth driver historically in PVs) over the next 9-12M, muted ~5% capacity CAGR, higher royalty, and lower treasury income are likely to restrict EPS CAGR to 4% over FY24-27E. We trim FY25E/26E/27E EPS by ~2.5% each, to factor in the weak demand scenario.

Outlook

We retain REDUCE with unchanged TP of Rs1,750 at 23x Sep-26E core PER. We prefer MSIL over HMIL (refer to our Hyundai IC report), given its catch-up on operational and financial metrics (even on a lower SUV mix) with a much diversified product and powertrain mix, and a higher growth optionality (potential small-car recovery, aggressive 8% capacity CAGR, 7-seater SUV launch in H2FY26E, and 10 new models by 2030).

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