Hyundai Motor India stock: Check latest analyst views and price targets after muted debut

Shares of Hyundai Motor India Ltd, which had a muted debut on Dalal Street on Tuesday, witnessed more selling pressure in its first trading session. The Indian stock market’s biggest IPO failed to live up to Street expectations and retreated amid selling pressure in broader markets, but saw some new interest from a number of brokerages.

Shares of Hyundai Motor India were listed at a discount of 1.48 percent to Rs 1,931 on the BSE against the issue price of Rs 1,960 on Tuesday. The shares fell another 5 percent to Rs 1,846 during the session, taking the overall decline to 6 percent from the issue price. However, brokerages are mostly positive on the issue and have started coverage of the stock alongside the listing itself.

Hyundai is likely to report a volume CAGR of 8% over the next two years, Motilal Oswal said in his IC report. “After a moderation in FY25E earnings, we expect HMI to post 17 percent earnings CAGR over FY25-27E. We believe that while both OEMs are very close in competence and growth potential future, we may give a slight premium to Hyundai over Maruti,” he said.

“We assign a 27x one-year Fwd PER multiple to Hyundai, relative to our target multiple of 26x currently assigned to MSIL. Therefore, we arrive at our target price of Rs 2,345 for Hyundai Motor India, based on 27 times September 26 earnings. “, he added. Motilal sees lack of demand recovery, supply chain issues, regulatory disruptions, delay in new facilities; and rising raw material prices are the main risks.

Macquarie has also started coverage of the debutant PV player, citing that it is a pure premiumization and growth play. “We believe HMIL deserves to trade at a premium PE multiple relative to peers due to its favorable portfolio mix and premium positioning,” he said.

Powertrain optionality, including parent capabilities and market share upside risk due to launch of new models/powertrains, are positive in the medium term, the company said with an ‘outperform’ rating for shares with a target price of Rs 2,235, the global brokerage said.

Another foreign brokerage, Nomura, also started coverage of Hyundai Motor India on the day of listing itself. The company is betting on style and technology, while continued premiumization is expected to drive high-quality growth, Nomura said. Long road ahead for Indian automobile industry – current penetration of 36 cars per 1,000 people, he said.

“Estimates to deliver 8 percent volume CAGR in FY25-27F, driven by 7-8 new models (including facelifts) and its Ebitda margins to improve to 14 percent in FY27F from 13.1 per cent percent in FY24, led by mix improvement, cost reduction and operating leverage,” Nomura added with a price target of Rs 2,472 and a ‘buy’ tag, suggesting a 26 percent upside in the stock.

Despite a muted listing, Hyundai’s strong fundamentals, being the second largest passenger vehicle manufacturer in India and its strategic focus on the SUV segment, continue to support its long-term growth prospects, said Shivani Nyati, Head of Swastika Investmart Wealth. “Investors who came in with a long-term perspective might consider holding the stock,” she said.

However, Emkay Financial Services initiated coverage of Hyundai Motor India with a ‘reduced’ rating amid a lackluster EPS CAGR of 5 percent during FY24-27E. HMIL has established a strong franchise in India; however, lack of major launches over the next 12-18 months, 5% capacity CAGR, higher royalties and lower treasury revenues are likely to constrain EPS growth, it said.

While Maruti Suzuki also faces similar growth challenges in the near term, we prefer it over HMIL given its upgrade in operational and financial metrics, with a very diverse mix of products and engines and greater growth optionality, generating a higher rate of 6% and 10%. revenue and EPS CAGR over FY24-27E,” he added with a price target of Rs 1,750.

On the other hand, Sagar Shetty, research analyst at StoxBox, has assigned an “avoid” rating to the issue and will reassess our rating in the future, following the sustained performance of the business in the coming quarters. “The recent depletion of HMIL’s cash and bank balances following the Indian entity’s hefty dividends to its South Korean parent raises questions about its expansion plans,” he said.