Hyundai Motor down 15% in 5 moths; experts see buying opportunity—here’s why

Extending losses to the second consecutive session, Hyundai Motor's share price ended 0.63 per cent lower at ₹1,663.05 on Tuesday, March 11. Hyundai Motor India's share price opened at ₹1,659.80 against its previous close of ₹1,673.65 and traded volatile during the session, rising nearly 1 per cent to ₹1,686 and dropping over 1 per cent to the level of ₹1,655.30.

Hyundai Motor India share price trend

Hyundai Motor India shares have declined nearly 8 per cent this year so far. The stock debuted on October 22 last year. As of March 11 close, it is down 15 per cent against its issue price of ₹1,960.

Hyundai Motor shares hit its all-time high of ₹1,968.80 on its listing day and an all-time low of ₹1,610.15 on January 29 this year.

Experts bullish on Hyundai Motor India stock

Several experts appear positive about this automobile stock primarily due to its superior franchise backed by strong parentage and the recent correction in stock price.

Brokerage firm Nirmal Bang Equities has initiated coverage on the stock with a buy recommendation, pegging the target price at ₹2,111. This implies a 27 per cent upside potential from the stock's March 11 closing of ₹1,663.05.

"We believe that Hyundai Motor India is a strong franchise with a diverse portfolio addressing nearly 87 per cent of the PV (passenger vehicle) market spread across the fuel types and segments," said Nirmal Bang.

"Over the last three decades, it has become a formidable player with a healthy market share across segments viz 34 per cent, 20 per cent and 18 per cent share in the mid-size SUVs, compact SUVs and premium compact car segments, respectively. We remain constructive on Hyundai Motor India," the brokerage firm said.

Nirmal Bang underscored that Hyundai Motor India, backed by the formidable technological and financial strength of Hyundai Motor Company, has been a pioneer in driving innovation in the Indian automotive landscape.

Moreover, the brokerage firm sees abundant export opportunities for the company.

"Hyundai Motor India over FY21-24 has grown its export revenue at a CAGR of 25 per cent. Hyundai Motor Company plans to use Hyundai Motor India as one of the largest foreign production bases to target emerging markets such as Southeast Asia, Latin America, Africa, and the Middle East," Nirmal Bang pointed out.

The brokerage firm expects a volume and revenue CAGR of 5.6 per cent and 11.2 per cent, respectively, over FY25-FY27E. It also expects an EBITDA margin of 13.6 per cent in FY27E, an increase of 120bps over FY25-FY27, which could drive EPS CAGR to nearly 18 per cent.

Further, Nirmal Bang expects ROE (return on equity) and ROCE (return on capital employed) of 34.8 per cent and 34.2 per cent, respectively, from 42.4 per cent and 40.7 per cent, respectively, in FY25 due to planned capex putting pressure on return ratios.

"We value Hyundai Motor India in line with its closest peer, Maruti Suzuki, despite its growth profile constrained by capacity as we believe Hyundai Motor India outshines Maruti Suzuki on the factors of technological capabilities, superior financial matrix, and premium brand perception," said Nirmal Bang.

While the stock's fundamental factors make it an attractive buy at the current juncture, technical indicators also appear favourable.

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, highlighted that Hyundai Motor India trades above a key support zone of ₹1,600-1,610, aligning with the S1 monthly pivot. Additionally, a bullish bat pattern is nearing completion, around ₹1,646, reinforcing the potential for a rebound.

"Given this setup, one may consider holding or adding positions in the ₹1,610-1,640 range, anticipating an upside move toward ₹1,750. A stop loss should be placed below ₹1,570 to manage risk. The confluence of technical factors suggests a favourable risk-reward setup, making this zone an attractive buying opportunity for traders looking to capitalise on a potential bullish reversal," said Patel.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.