Hyundai Motor Gets UBS' 'Buy' Initiation On Capacity Expansion, Premiumisation

UBS has initiated coverage on Hyundai Motor India Ltd. with a ‘buy' rating and a price target of Rs 2,350, highlighting the company's strategic capacity expansion and renewed growth trajectory. As India's second-largest passenger vehicle manufacturer by volume, Hyundai is poised for a strong comeback, with the brokerage expecting its new optimisation-led strategy to drive domestic and export momentum.

A key catalyst for growth is Hyundai's upcoming plant in Maharashtra, which will expand production capacity by approximately 30%. UBS anticipates this will enable Hyundai Motor to scale volumes, especially in the SUV segment, while positioning India as a global export hub. The brokerage forecasts domestic volume growth of 10% between fiscal 2026 and fiscal 2028, significantly above the 2% growth seen during financial year 2019–2025. Export volumes are also expected to rise by 11% annually over the same period, following years of stagnation.

Hyundai's success is rooted in its leadership in premiumisation and technology adoption. The company introduced India to the mid-sized SUV segment with the Creta and was among the first to offer features such as sunroofs, GDi engines, DCT gearboxes, and ADAS. This consumer-driven focus on upmarket features will continue to give Hyundai a competitive edge, according to UBS.

Despite underperforming in volume growth over the past decade, Hyundai Motor has kept pace with industry peers in revenue and operating profit, thanks to its strong product mix and pricing power. The average selling price for Hyundai vehicles grew at a robust 7% CAGR, the highest in the sector. Moreover, Hyundai has consistently delivered higher EBIT margins than Maruti Suzuki India Ltd. and Mahindra & Mahindra Ltd., despite a relatively smaller scale.

The brokerage expects a 16% Ebitda CAGR during fiscal 2026–2028, supported by operating leverage and a growing export share. While risks remain—notably an overdependence on the Creta and potential missteps in future launches—Hyundai's pipeline of 26 new models by 2030 and its imminent entry into hybrids reflect strong growth intent.

Valued at 18 times FY27E EV/EBITDA, in line with Maruti's historical average, Hyundai's focus on growth, product innovation, and premium positioning justify the bullish outlook and long-term investment case, UBS said.