Hyundai Motor India lists at 1.3% discount

Motilal Oswal has initiated coverage on Hyundai Motors India (HMI) with a target price of Rs 2,345, indicating a potential upside of 20%. HMI holds a diverse portfolio that captures nearly 87% of India’s passenger vehicle (PV) market, boasting significant domestic market shares in several fast-growing segments—34% in mid-size SUVs, 20% in compact SUVs, and 18% in premium compact cars.

The company is well-aligned with domestic PV industry trends, as 63% of its sales mix comes from utility vehicles (UVs). HMI benefits from strong support from its parent company, Hyundai Motor Company (HMC), in management, R&D, design, and supply chain operations. HMC's strengths in emerging mobility domains can be effectively leveraged in the Indian market, enhancing HMI's competitive position.

Hyundai's limited exposure to electric vehicles (EVs) and hybrids, accounting for just 11% of its current portfolio, has raised concerns about its competitiveness in a market swiftly shifting toward EV adoption. Furthermore, operational challenges, including constrained production capacity and a lack of recent model launches, have further dampened enthusiasm.

We initiate coverage on Hyundai Motor India (HMIL) with a "Reduce" rating and a target price of Rs 1,750, valuing it at around 23x core September 2026 estimated price-to-earnings ratio, similar to Maruti Suzuki India Limited (MSIL).

Despite HMIL's strong presence in India, the company is projected to deliver a modest ~5% earnings per share (EPS) compound annual growth rate (CAGR) over FY24-27 due to a lack of major launches in the next 12-18 months, muted capacity expansion (~5% CAGR), higher royalty payments, and lower treasury income.

While MSIL also faces near-term growth challenges, it is preferred over HMIL due to its better operational and financial metrics, more diversified product and powertrain mix, and higher growth potential, including a projected 8% capacity CAGR, new SUV launches, and 10 models by 2030, driving a stronger revenue/EPS CAGR of 6%/10% over FY24-27.

Macquarie has initiated coverage on Hyundai Motor India, highlighting the company's premium portfolio mix and strong market positioning as key factors for deserving a higher price-to-earnings (PE) multiple compared to peers. The brokerage also sees medium-term positives from Hyundai's powertrain options and potential market share gains from new model launches. Macquarie has given an "Outperform" rating on the stock, with a target price of Rs 2,235, implying a 14% upside from the issue price's upper band.