Hyundai Motor India shares rally 7% despite Q1 profit decline. Should you buy, sell or hold?
Brokerages maintained a positive outlook on the stock, citing Hyundai’s focus on regaining domestic market share, expanding exports, improving product mix, and cost optimisation initiatives.
Hyundai Motor India Limited reported a consolidated net profit of Rs 889 crore for Q1 FY27, declining 35% year-on-year compared with Rs 1,369 crore in the same quarter last year. Revenue from operations slipped marginally by 0.5% YoY to Rs 16,335 crore from Rs 16,413 crore. Ebitda declined 31% YoY to Rs 1,512 crore, while Ebitda margin contracted to 9.3% from 13.3% a year ago, impacted by commodity inflation, lower volumes, plant startup costs, and an adverse product mix.
The company acknowledged that Q1 FY27 was a challenging quarter, impacted by multiple headwinds affecting volumes and profitability. Hyundai said temporary production disruptions limited domestic volume growth to 5.4% YoY, while exports were affected by geopolitical challenges, including the ongoing West Asia conflict.
“Q1 FY27 was a challenging quarter, affected by multiple headwinds impacting volumes and profitability. With 100% normalisation of production, coupled with a healthy demand environment and an upcoming product pipeline, recovery is likely to gain pace from Q2 onwards across both domestic and export businesses,” said Tarun Garg, Chief Executive Officer and Managing Director, Hyundai Motor India.
Brokerages remain optimistic
HDFC Securities noted that Hyundai’s Q1 revenue performance was broadly in line with its estimates and Bloomberg consensus. The brokerage highlighted management’s aggressive strategy to revive business fundamentals through market share recovery, export expansion, improved product mix, localisation, and value engineering.
HDFC Securities expects a rising CNG mix and the upcoming compact electric SUV launch to strengthen Hyundai’s positioning ahead of the upcoming CAFE 3 emission norms. The brokerage maintained an Add rating and valued the company at 23x June 2028 earnings per share, with a target price of Rs 2,142.
Motilal Oswal Financial Services said Hyundai’s Q1 FY27 profit beat its estimates, with PAT at Rs 8.9 billion compared with its estimate of Rs 8.3 billion, supported by higher-than-expected other income and lower depreciation. The brokerage said Ebitda margin at 9.3% was broadly in line with expectations, though down 400 basis points YoY due to cost pressures and operational challenges.Motilal Oswal expects Hyundai’s new launches and strong export order book to drive growth in the second half of FY27. It estimates Hyundai to deliver around 9% volume CAGR over FY26-28, led by a 12% CAGR in exports, while earnings are projected to grow at around 16% CAGR during the period.
The brokerage believes Hyundai remains well-positioned to benefit from India’s premiumization trend, supported by its strong SUV portfolio, and reiterated its Buy rating with a target price of Rs 2,334, valuing the stock at 26x FY28 estimated earnings. With production normalisation, new launches, and export recovery expected to support growth from Q2 FY27 onwards, analysts believe Hyundai’s near-term challenges could give way to a stronger second half performance.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
