Hyundai Motor India shares plunge 20% from all-time peak. Will Q3 help turn the tide?

Despite the GST 2.0 lift-off, Hyundai Motor India’s stock has fallen 20% from the record high it touched in September 2025, as investors reassess the company’s growth outlook amid mixed signals on demand and margin concerns emanating from its newest plant. While analysts continue to forecast steady revenue growth supported by exports, a richer product mix and currency tailwinds, concerns over the limited benefit from the GST rate cut and near-term headwinds have kept investors on edge. Here’s what experts are saying.

InCred Equities does not believe so. The brokerage said the benefit from the lower 18% GST rate is limited to just 30% of Hyundai’s net sales. Strong growth over the last three years in exports, parts and services, and large SUVs has reduced Hyundai’s dependence on products covered under the new GST rate to 30% of net sales value in FY25.

With demand sensitivity expected to be higher in low-priced compact cars, InCred believes Hyundai’s sales benefit from the GST rate cut will be limited compared with peers such as Maruti Suzuki and Tata Motors. This, it said, could extend the underperformance of Hyundai’s domestic volume growth versus the market leader seen in recent months.

On the capacity front, InCred said nearly 30% capacity expansion is likely from the recently commissioned Pune plant. The brokerage expects the facility to initially produce refreshed versions of the Venue and Exter, while a new compact car launch is scheduled for FY27F. An India-dedicated electric vehicle planned for CY27F will also be closely tracked.

Margins could face pressure in the near term. InCred said the high overheads of the new plant may weigh on EBITDA margins until capacity utilisation improves, even as Hyundai’s margin resilience over the past six months has surprised the brokerage.

While InCred raised FY26F–28F EPS estimates for Hyundai by 2 to 7% on favourable INR depreciation, it maintained a cautious stance on valuation. The brokerage has a Reduce rating with a revised target price of Rs 2,023, citing market share pressure as a key risk and new product launch success as the primary upside trigger.

Hyundai Motor India Limited reported total sales of 58,702 units in December 2025, reflecting a 6.6% year-on-year increase compared to December 2024. However, the performance marked a sequential slowdown, as the company had sold 66,840 units in November 2025.

On a month-on-month basis, sales declined across both domestic and export segments. Domestic volumes fell 15.7% to 42,416 units in December from 50,340 units in November. Export volumes remained relatively stable, easing 1.3% to 16,286 units in December from 16,500 units in the previous month.

Despite the sequential decline, exports continued to provide support, rising 26.5% year-on-year in December, broadly in line with the 26.9% year-on-year growth recorded in November. In November, Hyundai’s total sales had grown 9.1% year-on-year, aided by a 4.3% increase in domestic volumes.

Looking ahead to Q3, Nuvama Institutional Equities expects revenue to grow in the mid single digit, supported by a better product mix, higher exports and INR depreciation on a year-on-year basis. The brokerage also expects EBITDA margins to expand on a low base, driven by localisation initiatives and lower discounts. However, it flagged demand outlook and new product timelines as key monitorables for the coming quarters.

Morgan Stanley has maintained its Overweight rating and a target price of Rs 3,066 per share, but cautioned about potential margin pressure in the second half due to the ramp-up of new facilities and higher depreciation. It expects margins to recover from FY27 as volumes rise. After Q2, the international brokerage trimmed its volume and EBITDA margin estimates by 1 to 3% and 30 to 40 basis points, respectively, while EPS forecasts for FY27 to FY28 were lowered by 6 to 9%. Despite near-term headwinds, the brokerage remains positive, citing medium-term recovery prospects.

Citi, also with a Buy call and a target price of Rs 2,900, said near-term cost pressures could emerge from the Pune plant start-up, which may add 20 to 25% in overheads. After Q2, it trimmed its FY26 to FY28 EBIT and PAT estimates by 1 to 2% and prefers Maruti Suzuki and M&M over Hyundai in the auto space.

Also Read | Inflow slowdown hits large, mid and smallcap funds in December. Is investor sentiment cooling?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)