Hyundai India's growth engine roars on SUVs, capacity expansion

The carmaker's short-term gains may stall in neutral over high valuations

- RAM PRASAD SAHU

With a diversified product portfolio, entrenched market position, solid manufacturing base, and technological support from its global parent, Hyundai Motor India is poised to benefit from the steady growth trend in the underpenetrated Indian passenger vehicle (PV) market. A 63 per cent contribution from the high-growth utility vehicle (UV) segment, along with capacity expansion and product launches, is expected to help it outperform its peers.

Though prospects are strong, the valuation of the ₹27,870 crore initial public offering (IPO) at the top end of the price band appears high. The country's second-largest PV maker by volume, with a 15 per cent market share, is seeking a valuation of 26.3x its 2023-24 (FY24) earnings, which is about 10 per cent lower than the market leader, Maruti Suzuki India. While Hyundai boasts a superior margin and returns profile, its volumes, market share, and distribution reach are about a third of Maruti's.

Brokerages believe the company will deliver value over the long term, but there may be limited short-term gains for investors due to full valuations.