Goldman Sachs On Hyundai Motor India: Automobile giant Hyundai Motor India (HMIL) could be heading into a stronger second half of FY27 (H2 FY27), with the company expecting industry growth to accelerate even as the market faces a high base.
Goldman Sachs sees multiple levers that could help Hyundai Motor India outperform the industry, from improving plant utilisation and higher-margin exports to lower discounts and rising localisation.
Goldman Sachs analysts Chandramouli Muthiah, Kota Yuzawa, Rishabh Rathi and Shrey Mehta remain ‘Buy' on Hyundai Motor India with a 12-month target price of Rs 2,640.
The brokerage expects the company to benefit from a combination of volume recovery, improving margins and capacity expansion.
H2 FY27 Demand Could Pick Up
Hyundai Motor India expects the Indian auto industry to grow 5% in 2HFY27, according to Goldman Sachs. The brokerage sees room for HMIL to grow faster than the industry in the near term.
One positive signal is pricing. Average discounts for Hyundai Motor India have fallen to 2.8% from 3.4% a year earlier, pointing to improved pricing conditions.
Goldman Sachs said the company has several levers that could support margins in the near term.
These include a faster-growing export mix, the Chennai incentive kicking in from the second quarter, recovery in volumes following the Mobis disruption and higher utilisation at the Chennai plant.
Plant utilisation currently stands at 71%, but Goldman Sachs expects it to return to around 90%, helped by new model launches and normalised production.
Pune Plant Acceleration Could Add Capacity Sooner
Hyundai Motor India has brought forward the start of third-shift operations at its newly acquired Pune, or Talegaon, plant to October 2026, nearly two years ahead of its original mid-2028 timeline.
The plant is expected to have an initial two-shift capacity of around 120,000 units a year, rising to approximately 170,000 units with three shifts.
Hyundai Motor India is targeting a capacity of 250,000 units by 2028 and 300,000-320,000 units by 2030.
Exports Emerge As A Key Margin Lever
Goldman Sachs highlighted Hyundai's export strategy as another potential earnings driver.
The company expects exports to account for 30% of its mix by 2030, equivalent to around 300,000-400,000 units annually. Export margins are estimated to be 2-3 times higher than the domestic business.
The Middle East order backlog remains strong, although shipping vessels continue to be a bottleneck.
Hyundai Motor India is also pushing localisation, with local sourcing expected to rise from 76-82% currently to 85-90% by 2030. Around the Pune plant, 56 suppliers have been incentivised to increase localisation, with 31 already committed to doing so.
EV, New SUV Pipeline Adds Another Trigger
Hyundai Motor India expects to launch its compact India EV in Q4 FY27, targeting the Nexon segment. The company expects initial EV margins to remain below ICE margins, with cost reduction and localisation helping achieve parity by 2030.
A new mid-size SUV is also planned in the Creta category, but Hyundai intends to differentiate it as a technology-first, software-defined vehicle aimed at Gen Z and digitally native buyers.
The company believes this positioning can reduce the risk of cannibalisation.
Goldman Retains ‘Buy' On Hyundai Motor India
Goldman Sachs values Hyundai Motor India at 24x P/E, applying a slight discount to Maruti Suzuki's 10-year historical multiple.
The brokerage's Rs 2,640 target price comes with a ‘Buy' rating. Key risks, analysts believe, include weaker traction for new launches, delays in capacity expansion, softer demand recovery, over-reliance on products such as Creta and a more competitive product environment.
That said, Goldman Sach's thesis increasingly rests on whether capacity, exports, localisation and new products can turn the expected H2 industry recovery into faster growth and better margins for the company.
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