Hyundai Motor hits new low in firm market; down 21% from issue price

The stock's underperformance versus peers has been stark in recent months due to disappointing Q3 results and the decline in domestic market share in 9MFY25.

Hyundai Motor share price: Shares of Hyundai Motor India (HMI) hit a new low of Rs 1,555.80, falling 3 per cent on the National Stock Exchange (NSE) in Tuesday’s intraday trade amid heavy volumes in an otherwise firm market. At 10:56 AM, the stock of the automobile company was trading 2 per cent lower, as compared to the 1 per cent rise in the Nifty 50. A combined nearly 1 million shares have changed hands on the NSE and BSE.

 

HMI had launched India’s largest initial public offering (IPO) last year, where it raised Rs 27,870 crore via the primary market route. With today’s fall, currently, Hyundai Motor is trading 21 per cent below its issue price of Rs 1,960 per share. The company made its stock market debut on October 22, 2024. It had hit a 52-week high of Rs 1,968.80 on its listing day.

 

 

The stock’s underperformance compared to peers has been stark in recent months, as it lost domestic market share to the tune of 100 bps in the first nine months (April to December) of the financial year 2024-25 (9MFY25). 

 

In the past one month, HMI has underperformed the market by declining 14 per cent, as against the 1 per cent fall in the Nifty 50. The company's stock has been under pressure due to disappointing earnings for the October-December quarter (Q3) of the current financial year 2024-25 (FY25). 

 

HMI saw a 19 per cent year-on-year (YoY) decrease in its consolidated net profit at Rs 1,161 crore in Q3FY25. Further, its revenue from operations declined 1.3 per cent YoY to Rs 16,648 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin contracted to 11.27 per cent from 12.88 per cent in the year ago quarter.

 

The company's Ebitda margin corrected by a sharp 161 bps YoY and 151 bps sequentially due to higher expenses. Management attributed it to one-off employee costs, which, analysts feel, are marginal to swing Ebitda.

 

HMI is confident about its growth trajectory and is committed to drive long-term value for its stakeholders. The company has a positive outlook on growing electric vehicle (EV) penetration in India and is headed towards electrification with a holistic approach.

 

While the challenges persist in the overall market due to global factors, the management said the company’s business fundamentals remain strong. They remain confident in the company's ability to leverage strengths and actively explore potential opportunities to improve volumes and profitability.

 

However, with Creta EV expected to contribute just 10 per cent to total Creta volume, analysts at InCred Equities feel that volume and market share challenges persist, especially to utilise the new Pune plant capacity. The brokerage firm cut the company's sales estimates by ~2 per cent for FY25F-27F. “The Ebitda margin challenges to increase as Indian rupee or INR depreciation to impact the company, which is a net importer, leading to our 8 per cent cut in FY25F and ~4 per cent in FY26F-27F. Lower depreciation and interest costs limit the EPS reduction,” the brokerage firm said in the Q3 result update.

 

Meanwhile, industry growth for domestic passenger vehicles (PV) in FY26F is expected to be in low single digits due to market stabilisation after recent high-growth years. Factors like potential lowering of interest rates, improved rural demand, and better market sentiment are considered as positive drivers for the industry outlook, analysts said.