CMP: ₹2,089.35
Hyundai Motor India Q3FY26 EBITDA rose 8 per cent year on year but fell 17 per cent quarter on quarter to ₹2,020 crore, a sharp miss vs our estimate (13 per cent)/Bloomberg consensus estimate (-17 per cent).
The management expects strong wholesales going ahead, supported by GST-led demand tailwinds and optimal dealer inventory level below four weeks in January 2026 (vs five weeks typically) as against two-three weeks as of end-December 2025. The company gave guidance of 5-6 per cent domestic car industry growth in FY27F. Exports continue to maintain their strong momentum and are likely to exceed earlier guidance of 7-8 per cent growth. A price hike was implemented on January 1, 2026, to pass on the cost increase to customers.
The continued underperformance in domestic market volume recovery is an area of concern, leading to volume cut of 1-2 per cent for FY26F-28F. The weakness in EBITDA margin from new plant costs led to our 1-3 per cent EBITDA cut for FY26F-28F. Lower-than-expected depreciation and interest costs, limits our EPS cut to 1-2 per cent.
Despite refreshed new products launched recently and commissioning of Pune plant, the company’s participation is domestic industry volume recovery post GST rate cut is an area of concern. With EPS cuts, we roll forward and reduce our target P/E to 22x, from 24x earlier, leading to a lower target price of ₹1,904 vs ₹2,023 earlier. The current rich valuation led us to retain our REDUCE rating on the stock.
Published on March 6, 2026