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Since the start of the year, the index has gained 23 per cent, outpacing the Nifty’s 13 per cent gain over the same period.
2024 Hyundai Alcazar Facelift. (Photo: Shahrukh Shah/ News18)
Shares of Hyundai Motor India Ltd. declined as much as 6% to hit a day’s low of Rs 1,714 on November 13, after the car manufacturer reported its September quarter results, which were lower on a year-on-year basis on all parameters.
The fame reported a 15.5 per cent year-on-year (YoY) decline in its net profit at Rs 137.55 crore for the quarter ended September 2024 (Q2FY25), due to weak market sentiments and geo-political factors.
The company’s revenue from operations decreased 7.5 per cent YoY at Rs 17,260 crore from Rs 18,660 crore in the corresponding quarter of the previous year. Earnings before interest, tax, depreciation, and amortization (EBITDA) margin contracted to 12.78 per cent from 13.08 per cent.
Despite the sluggish market conditions, the management said the company has successfully maintained profitability in H1 FY25, largely due to our proactive and continuous cost control measures.
On the future outlook, in the mid to long term, the company expects a sustained demand momentum in the industry and will continue to focus on quality of growth by maintaining an optimum balance between volume, market share and margins.
Hyundai, India’s second-biggest carmaker with a 15 per cent market share, was listed in October following a $3.3-billion IPO that was the country’s largest-ever primary share sale. The counter made a weak debut on the exchanges on October 22 after listing at a 1.32 per cent discount at Rs 1,934 against its initial public offer (IPO) price of Rs 1960 on the NSE.
Not just Hyundai, the entire auto pack was down led by four-wheeler majors like M&M, Maruti Suzuki, and Tata Motors. The sentiment around the companies continued to be weak owing to weak demand, high cost of financing, and inflationary pressures.
During the second quarter, all original equipment manufacturers (OEMs) have reported weak numbers with some even cutting guidance. For instance, two-wheeler major Bajaj Auto slashed its guidance to a modest 5 per cent during its conference call last month.
Slowdown in domestic sales volume showing 6 per cent YoY decline to 1.5 lakh units impacted the overall performance. Also, the export volumes reported a steepest decline of 17 per cent YoY to 42k units, mainly due to the red sea crisis, which particularly affected sales in middle east, which is a key export market for the company. However, the company witnessed over 30 per cent increase in registration during this festive season, helping reduce the inventory level to 30 days. Moreover, CNG penetration for its flagship model Exter increased at the highest of 28.4 per cent in October v s 22.2 per cent in Q2FY25 vs 18 per cent in Q1FY25, ICICI Securities said in a note.
Looking ahead, it anticipates better performance owing to the new launch of Creat EV in January, along with the recent launch of new variants of the Venue and Alcaazar models. Over the long-term perspective, the brokerage firm remains positive on the stock due to consistent growth outlook amid industry tailwinds, a healthy line u p of SUVs, & capital efficient business model (RoE, RoCE: 20 per cent plus) with cash surplus balance sheet.
HMIL has guided to a low-single digit PV industry growth on a high base and a challenging demand scenario. HMIL has established a strong franchise in India; but lack of major launches (key growth driver historically in PVs) over the next 9-12M, muted 5 per cent capacity compound annual growth rate (CAGR), higher royalty, and lower treasury income are likely to restrict EPS CAGR to 4 per cent over FY24-27E, according to analysts at Emkay Global Financial Services.
Meanwhile, Motilal Oswal Financial Services (MOFSL) reiterates BUY rating on HMIL with a target price of Rs 2,235 per share.
When comparing HMI with MSIL, which is its closest peer, we believe that while both OEMs are very close in competency and future growth potential, we can ascribe a slight premium to HMI over MSIL given HMC’s technological prowess in emerging technologies that can be customized to meet Indian customer requirements as needed; superior financial metrics; a relatively premium brand perception; and better alignment with industry trends, MOFSL said in result update.
Since the start of the year, the index has gained 23 per cent, outpacing the Nifty’s 13 per cent gain over the same period.
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