Hyundai India Is As 'Global' As It Is 'Indian', And That Works To Its Advantage: Axis

Hyundai Motor India Ltd. is as global as it is Indian at the same time, and that works to its advantage, according to Axis Capital. That’s enough for a ‘buy’ initiation on the stock.

“Hyundai India is a fine mix of the qualities of an MNC (multinational corporation) with the execution abilities of a domestic OEM (original equipment manufacturer),” Axis Capital’s Nishit Jalan, Amar Kant Gaur and Pradip Pandey said in a March 19 note. “It has strong brand recall, premium positioning, and leadership in features and design, but it needs to improve on keeping its product portfolio fresh and focus more on the local market.”

On Oct. 22, 2024, Hyundai India became the first carmaker in more than two decades to drive onto Dalal Street, after selling shares in the country’s largest ever IPO.

Axis Capital initiated coverage on Hyundai India with a 'buy' rating and a target price of Rs 1,950, with a valuation at 25 times EPS of Rs 130 by FY27.

The brokerage expects the Creta maker to deliver a compounded annual growth rate of 11% over the next three fiscals, driven by higher local volumes, replacement demand and new models in both the internal-combustion and electric segments.

Premiumisation, which is Hyundai India’s trump card, can drive average selling prices higher by 2.5% CAGR. That’s likely to translate into an Ebitda margin of 12.9% in FY27-28 from 12.5% in FY25, according to Axis Capital.

“In our view, it has never been about the abilities of Hyundai, but about the intent, which seems to have improved from the medium-term perspective,” Axis Capital said in the note. 

“We prefer Hyundai to Maruti Suzuki to play the domestic PV growth story over the medium term. The key risks would be a sustained slowdown in domestic PV industry volumes and any increase in commodity prices.”