Hyundai Motor India’s dependence on large SUVs could see limited benefit on sales revenue from GST cut: InCred Equities

Hyundai Motor India’s high revenue dependence on large SUVs, exports, parts, and spares, which cumulatively make up for 70% of its sales revenue, could lead to the South Korean carmaker seeing a limited benefit from the revival in the passenger car market following the GST rate cuts, InCred Equities said in a note on Friday.

According to the research note, Hyundai Motor India has witnessed high-teen growth in the last three years, largely on the back of exports (which make up 15% of net sales), parts and services (which again make 15% of the net sales), and large SUVs (40% of the net sales), has left Hyundai dependent on the new 18% GST rate segment to only 30% of its net sales in FY25.

At the same time, InCred Equities preempts a high demand for low-priced, compact cars. “Hyundai’s sales benefit, we believe, will be limited vis-à-vis peers like Maruti Suzuki and Tata Motors. This, we feel, will prolong the underperformance of Hyundai’s domestic volume growth vis-a-vis the leader, Maruti Suzuki, seen in recent months,” reads the note. Consequently, InCred has raised the net sales forecast between FY26 and FY28 by just 3%, while upgrading industry volume growth by 300–700 basis points.

The new compact car from Hyundai Motor India is expected to be launched in FY27. The recently commissioned Chakan plant in Pune is expected to increase its overall capacity by 30%. The note states that the plant will initially be used to manufacture the refreshed Exter and Venue models. “The India-dedicated new electric vehicle planned for 2027 will be keenly watched.” As a result, the capacity of Hyundai Motor India will be fully realised by FY27, the note says.

Hyundai Motor India’s new plant in Chakan is also expected to exert pressure on its Ebitda margin, which has remained resilient in the past six months despite weakness in domestic passenger vehicle volumes. Meanwhile, its peers, such as Maruti Suzuki and Tata Motors, are facing Ebitda margin pressure.

With the GST rate cut addressing the affordability challenge for compact cars, Hyundai Motor India’s participation could be limited, according to InCred, as volume growth is expected to supersede value growth in the coming quarters. “The sharp run-up in its share price recently has made forward P/E valuation 26% higher vs Maruti Suzuki, which, we feel, will be difficult to sustain,” the note reads, adding that the upside to Hyundai Motor India’s scrip is the success of the new product launches.

Hyundai Motor India shares were trading 3.58% lower on the bourses at ₹2,638.80 apiece.