 |
|
The initial public offering (IPO) of Hyundai Motor India, the largest in India's history, saw a lackluster market debut. Despite the initial disappointment, the stock rebounded, gaining 6% in the afternoon on October 23, following its listing at a discount. Despite mounting concerns about the automobile sector's demand slowdown, analysts are bullish on Hyundai's future, citing its diversified product range, strong export performance, and commitment to innovation.
Motilal Oswal, a leading brokerage firm, set a target price of Rs 2,345 for Hyundai Motor, emphasizing its diverse product portfolio across the mid-segment, SUV, and premium categories. As the second-largest car exporter in India, Hyundai Motor India has achieved a 25% compounded annual growth rate (CAGR) in export revenue, and exports are expected to drive future growth. The firm projects an export volume CAGR of 11% over FY25-27.
Despite the possibility of a moderate year for the automotive industry in FY25, Hyundai is well-positioned for an 8% volume CAGR over the next two years, backed by its strong performance in emerging technologies and financial metrics. Motilal Oswal Research has given Hyundai a slight premium over its close competitor Maruti Suzuki, highlighting Hyundai's strength in emerging technologies and superior financial metrics.
International brokerage Nomura also expressed confidence in Hyundai Motor India, issuing a 'buy' call on the newly-listed entity. Nomura highlighted the company's focus on style and technology, with the ongoing premiumization strategy expected to drive high-quality growth. The company is projected to deliver an 8% volume CAGR over FY25-27, driven by the launch of 7-8 new models, including facelifts. Nomura anticipates EBITDA margins to improve to 14% by FY27, fueled by a better product mix, cost reduction, and operating leverage. Overall, Hyundai is expected to deliver a 17% earnings CAGR over FY25-27.
The positive outlook for Hyundai Motor India is supported by its commitment to emerging technologies and its focus on premiumization. The company's diversified product range, strong export performance, and cost reduction efforts are expected to drive future growth. However, the automobile sector faces challenges from the global economic slowdown and potential demand fluctuations. Despite these uncertainties, analysts are optimistic about Hyundai's ability to navigate these challenges and deliver strong returns to investors.
Source: Hyundai Motor India stock rebounds 6% following a weak debut, brokerages bullish