Hyundai Motor shares gain after weak listing. When is the right time to buy?

Hyundai Motor India share price: Despite Hyundai Motor India's underwhelming market listing, several brokerages remain optimistic about the long-term prospects of the automaker, pointing to solid growth potential, both in domestic and export markets

In Short

• Hyundai Motor shares rebound after weak IPO listing
• Analyst advises waiting for 10-15% discount post-IPO to buy
• Short-term concerns in the auto sector include slowing demand

Hyundai Motor India shares rebounded on Wednesday after a disappointing debut on Dalal Street a day ago, with the stock climbing by over 6% during intraday trading. After an underwhelming listing, where the shares initially traded below the issue price of Rs 1,960, Hyundai Motor shares reached a high of Rs 1,928.15 during early trade on Wednesday before settling at Rs 1,900 by 3:30 pm, reflecting a 4.42% gain over yesterday's closing.

Despite Hyundai Motor India's weak market listing, several brokerages remain optimistic about the long-term prospects of the automaker, pointing to solid growth potential, both in domestic and export markets. Hyundai, India’s second-largest car manufacturer, has maintained a 14.6% domestic market share, with exports playing an increasingly significant role in its revenue growth.

BROKERAGES BULLISH ON HYUNDAI

Despite the weak listing, brokerages such as Motilal Oswal and Nomura remain optimistic about Hyundai Motor India's growth trajectory. According to Motilal Oswal, the company's robust product lineup across various segments, including SUVs, mid-segment cars, and premium models, positions it well for future growth. The brokerage has set a target price of Rs 2,345 for Hyundai, citing its strong product portfolio and export growth potential.

Motilal Oswal projects a 25% compound annual growth rate (CAGR) in export revenue, with export volumes expected to grow at 11% CAGR from FY25 to FY27. The brokerage also sees Hyundai achieving an 8% volume CAGR over the next two years, while earnings are projected to grow by 17% CAGR over the same period. Additionally, Hyundai’s strength in emerging technologies and its financial performance give it an edge over its close competitor, Maruti Suzuki.

Nomura echoed this bullish sentiment, assigning a 'buy' rating to Hyundai shares. The international brokerage highlighted Hyundai’s focus on design and technology as key drivers of its future growth. With the launch of 7-8 new models, including facelifts, the company is expected to achieve an 8% volume CAGR between FY25 and FY27. Nomura anticipates EBITDA margins to improve to 14% by FY27, driven by a more profitable product mix, cost optimization measures, and enhanced operational efficiency.

Auto analyst Mrunmayee Jogalekar from Asit C Mehta Investment Intermediates Ltd highlighted Hyundai’s strong fundamentals and export growth potential.

"We like the company fundamentals with a medium to long term perspective, owing to its favourable product mix, superior return ratios and growth potential in exports market which is supported by ongoing expansion plans. Launch of Creta EV in Q4FY25E is now a key event to track in the near term," he added.

WHEN IS THE RIGHT TIME TO BUY HYUNDAI SHARES?

While Hyundai Motor India’s fundamentals remain solid, short-term concerns in the auto sector, such as slowing demand and high inventory levels, persist.

Prashanth Tapse, Senior VP (Research) at Mehta Equities, advises caution for new investors looking to enter the stock post-listing. Tapse suggests that potential buyers wait for the price to stabilise and explore opportunities when the stock is trading at a 10-15% discount to its issue price.

"For fresh new investors wishing to buy post listing, we advise to wait and watch for the price to settle and revisit the space with better discounted opportunity, best range of accumulate Hyundai can be -10-15% discount to its issue price. For long term Hyundai’s growth story remains intact in line with India growth story," he added.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)