Hyundai India Banks On Creta EV, Pune Plant To Grow Sales In 2025

Troubles at home and elsewhere weighed on Hyundai Motor India Ltd. in the third quarter of fiscal 2025. The outlook hereon isn’t rosy either. The onus to deliver growth falls yet again on the Creta, this time in an electric avatar.

“The (Hyundai India) management noted that the demand environment has been subdued in the domestic passenger vehicle market after a good festive season, while the geopolitical environment has been adverse for exports,” Citi Research said in a Jan. 28 note.

Standalone net profit of India’s second largest carmaker fell 19% year-on-year to Rs 1,124 crore in the three months ended Dec. 31, 2024, even as revenue declined 2.1% to Rs 16,242 crore, according to an exchange filing. That missed Bloomberg estimates.

• Revenue down 2.1% at Rs 16,242 crore (Estimate: Rs 17,089 crore).

• Ebitda down 14% at Rs 1,825 crore (Estimate: Rs 2,144 crore).

• Ebitda margin down 160 bps at 11.2% (Estimate: 12.5%).

• Net profit down 19% at Rs 1,124 crore (Estimate: Rs 1,328 crore).

One basis point is one-hundredth of a percentage point.

The decline in revenue notwithstanding, Hyundai India’s margins fell by 150 bps sequentially to 11.3% amid higher discounts and employee costs, including a one-time IPO-related reward, Emkay Global said in a note. 

According to the company, a favourable product mix—SUVs account for two-thirds of Hyundai India’s volumes—helped sustain revenue amid steep discounts in the final three months of 2024. Cost efficiencies helped minimise margin impact of subdued demand in India and geopolitical challenges for exports.

Any growth, however, is unlikely to return in a hurry.

Hyundai India sees the domestic four-wheeler industry grow by 2% year-on-year in the ongoing quarter. Urban demand is lacking but some revival is seen in rural markets — penetration improved to 21.2% in Q3 FY25 from 19.7% in the year-ago period. That should support the single-digit growth expected in 2025.

Still, there are some positives.

Hyundai India is banking on the Creta Electric to do a Creta in the EV space in the first year itself. The internal-combustion model, which essentially created the midsize SUV segment in India, accounted for a third of the company’s volumes in 2024. Even a fraction of that performance will help Hyundai India achieve its target of 20% EV market share. At least three new models are planned in the 'Creta plus and Creta minus' segments. 

Additionally, the company’s Pune plant will go onstream later this year. That facility would raise the annual production to 1.1 million from a little under 900,000 at present.

“Hyundai India should benefit from the Creta EV as well as potential new models after the Pune plant starts operations by the end of 2025,” the Citi Research note stated. “After high discounts in Q3 FY25, the pricing environment is also improving.”

The brokerage maintained a 'buy' rating on the stock as it expects volume growth in FY26, driven by capacity expansion. "The parent company can also lend support with new models.”

Premiumisation is another card that Hyundai India can play. Already, SUVs account for nearly 70% of the company’s monthly sales. The dual-cylinder technology introduced in the Nios hatchback and Exter sub-compact SUV has increased CNG penetration to 15% in Q3 FY25 from 12% in Q3 FY24. Over 50% of Hyundai cars sold in India today have sunroofs.

“Hyundai India has the agility to evolve according to customer preference or regulatory requirement towards alternative powertrains,” Emkay said.

Then there’s the matter of exports. The company shipped a total of 40,386 units in the December quarter. “Exports are seen as stable in the short term, with a healthy outlook over the mid-to-long term, backed by product introductions,” Emkay said in its note. “HMIL is a hub for emerging markets like the Middle East, Latin America, and Africa.”

To be sure, Emkay has still chosen to trim its outlook for Hyundai India.

“We trim FY25-27 EPS by 2-2.5% on account of the Q3 margin miss. Our target price is unchanged at Rs 1,750,” Emkay said in its note. “We prefer Maruti Suzuki India Ltd. due to small car revival and two SUV launches in FY26.” Citi Research has revised lower its target price for the stock to Rs 2,050 from Rs 2,250 apiece.