Hyundai Motor Gets 'Add' As Kotak Equities Initiates Coverage, Sees 11% Upside

Hyundai Motor India Ltd. got an 'add' rating as Kotak Institutional Equities initiated coverage on the stock on the back of strong parentage and growing penetration of personal vehicles. The research firm sees 11% upside.

While the sectoral view is still 'cautious' the brokerage set a target price of Rs 2,025 per share. The target is slightly above the issue price of Rs 1,960 per share of the automaker.

The recently listed unit of Korea's Hyundai Motor Group is "well-positioned" to benefit from the growing penetration of passenger vehicles, with its strong portfolio of SUVs, Kotak Equities said in a note. This will drive market share gains, it said.

The brokerage expects the near-term demand headwinds to persist in the domestic PV segment but added that over the long term the PV industry is set to grow at 6% CAGR. "We continue to expect the SUV segment to outperform industry growth in the long term."

The strong parentage of Hyundai Motor Co. will aid the company to smoothly navigate the powertrain transition and launch new advanced features aiding in driving higher average selling price growth.

Kotak Equities expects the auto-maker's revenue to grow at 8% CAGR over fiscal 2024-28, driven by a 5% CAGR growth in volumes, 3% CAGR in average selling prices and 8-11% CAGR in spare parts and service revenues.

After raising Rs 27,870 crore in its initial public offering—India's biggest so far—shares of the automaker debuted at a discount of 1.5%.

The maiden IPO of the India unit was subscribed 2.37 times, with bids led by qualified institutional buyers. The company had set a price band of Rs 1,865–1,960 per share for the IPO, which was a pure offer for sale of 14.2 crore shares.

Hyundai's stock rose as much as 0.89% during the day to Rs 1,841.9 apiece on the NSE. It was trading 0.32% higher at Rs 1,832.5 apiece, compared to a 0.08% advance in the benchmark Nifty 50 as of 11:00 a.m.

The scrip has been on an upward trajectory from its lowest level of Rs 1,689. The immediate support of the counter exists at Rs 1,826 per share, post which, it could test the Rs 1,811 mark. The immediate resistance is seen at Rs 1,851 and will rise to Rs 1,871 if the first level is breached.

The scrip currently trades below the 21-day exponential daily moving average, indicating stock still trades on a cautious note. It currently tests the nine-day simple moving average at the Rs 1,831 mark.

Since its listing on the street on Oct. 22, the stock has risen by 0.71% while the benchmark NSE Nifty 50 has risen by 0.6% in the same period.

Of the 12 analysts tracking the automaker, nine have a 'buy' rating on the stock, and three have a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 16.5%.