Hyundai Motor India shares: Weak demand, discounts hit Q2 results; should you buy, hold or sell stock?

The maiden quarterly results by Hyundai Motor India Ltd were hit by 9 per cent YoY volume decline and higher discounts, leading to a 30 basis points YoY Ebitda margin contraction. MOFSL said while the passenger vehicle (PV) industry’s demand moderated, it expects Hyundai Motor India to post steady growth given its favorable SUV mix and strong export opportunities going forward.

For now, the domestic brokerage has broadly retained its FY25 and 26 EPS estimates. It assigned a slightly higher multiple to Hyundai Motor India at 27 times September 2026 EPS, compared with 26 times for Maruti Suzuki India Ltd, given its strong parent support for new technology, superior financial metrics, a relatively premium brand perception, and better alignment with industry trends.

The brokerage reiterated its 'Buy' rating on the stock with a revised target price of Rs 2,235.

When comparing Hyundai Motor India with Maruti Suzuki, which is its closest peer, MOFSL said while both OEMs are very close in competency and future growth potential, but it likes HMC’s technological prowess in emerging technologies that can be customised to meet Indian customer requirements as needed; its superior financial metrics; a relatively premium brand perception; and better alignment with industry trends.

Highlights from the management commentary

Domestic demand: Hyundai Motor India has guided a low single-digit growth for the PV industry in FY25, on the high base of last year. Overall, the performance was weak in Q2FY25 as volume decline was due to domestic slowdown and geopolitical challenges, impacting exports. However, higher demand for SUVs and the marriage season in November render confidence of a steady demand in 3Q.

Rural demand remains positive: Hyundai Motor India believes that better crop output led by healthy monsoons should drive rural demand in the coming months. Rural contributes 21 per cent of overall volumes for Hyundai Motor India against 20 per cent last year, which used to be 16.5-17 per cent a few years ago.

Exports: Most of the countries, particularly Africa, Mexico, and LATAM, witnessed volume growth in H1FY25. However, regions such as the Middle East faced headwinds due to the Red Sea crisis. The company reiterated that India will be its production hub for the emerging markets.

New product launches: Hyundai Motor India has lined up four new EV launches, beginning with the Creta EV scheduled for 4Q launch. While Hyundai Motor India did not provide specifics on the upcoming ICE models, it noted that the company will continue to target white spaces and explore new and growing segments.

MOFSL said Hyundai Motor India is well-positioned to benefit from the premiumisation trend in India.