The brokerage believes that the government’s recent GST tweak will have a limited impact on sales revenue growth. “High revenue dependence on large SUVs, exports, and parts and spares (70%) will limit the revenue benefit from GST cut-led car demand revival,” said Pramod Amthe of InCred Equities.
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“The high-teen growth in the last three years witnessed in exports (15% of net sales), parts and services (15%), and large Sports Utility Vehicles or SUVs (40%) has reduced Hyundai’s dependence on new 18% GST rate products to just 30% of net sales in FY25. With high demand sensitivity expected in low-priced compact cars, Hyundai’s sales benefit, we believe, will be limited compared with peers like Maruti Suzuki and Tata Motors,” the report added. This is expected to prolong underperformance in Hyundai’s domestic volume growth. InCred has raised FY26F–28F net sales by just 3%, while upgrading industry volume growth by 300–700 basis points.The brokerage acknowledged Hyundai’s strong margins in recent months, considering the domestic car industry’s volume weakness and peers such as Maruti Suzuki and Tata Motors facing EBITDA margin pressure. That may change, says InCred, adding that high overheads of the new plant will exert pressure on EBITDA margins in the short term until the plant achieves optimal capacity utilization.
On the valuation front, the brokerage added that with the GST rate cut addressing affordability challenges for compact cars, volume growth will take priority over value growth in the coming quarters, where Hyundai’s participation will be limited. The sharp run-up in its share price recently has made forward P/E valuation 26% higher vis-à-vis Maruti Suzuki. “Market share pressure will be a key factor to monitor. The upside risk is the success of new product launches,” it added.
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Q1 Performance Snapshot
The company reported an 8% year-on-year (YoY) decline in consolidated net profit to Rs 1,369.23 crore, compared with Rs 1,489.65 crore in the same quarter of the previous financial year. Meanwhile, revenue slipped 5.5% YoY to Rs 16,179.61 crore, down from Rs 17,131.24 crore in the year-ago period.
Sequentially, PAT fell 15.2% from Rs 1,614.34 crore in the March quarter of FY25. Revenue from operations also declined 7.7% QoQ, down from Rs 17,527.25 crore as of March 31, 2025.
At around 12:20 pm, shares of the company were trading at Rs 2,683, down 2% from the last close on the NSE. Hyundai Motor India shares have risen nearly 60% in the last six months.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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