Hyundai Motor India Shares Drop 20% From Peak as GST Benefits Remain Limited
Hyundai Motor India shares have fallen 20% from September peaks as investors weigh limited GST benefits and margin pressures from the new Pune plant. December sales rose 6.6% year-on-year to 58,702 units but declined sequentially. Analysts note only 30% of sales benefit from GST cuts, while the Pune facility may pressure margins near-term despite adding 30% capacity expansion.
*this image is generated using AI for illustrative purposes only.
Hyundai Motor India shares have declined 20% from their record high touched in September, as investors grapple with mixed signals on demand outlook and concerns over margin pressure from the company's newest manufacturing facility. While the automaker continues to benefit from export growth and product mix improvements, analysts highlight limited gains from recent GST rate cuts and near-term operational headwinds.
Limited GST Benefits Impact Growth Prospects
The recent GST rate reduction has provided minimal support to Hyundai's sales performance, according to analyst assessments. InCred Equities notes that benefits from the lower 18% GST rate are restricted to just 30% of the company's net sales. This limited exposure stems from strong growth over the past three years in exports, parts and services, and large SUVs, which has reduced Hyundai's dependence on products covered under the new GST framework.
| GST Impact Analysis: | Details |
|---|---|
| Coverage of New GST Rate: | 30% of net sales |
| Primary Beneficiary Segments: | Compact cars with higher demand sensitivity |
| Expected Sales Benefit: | Limited compared to peers |
With demand sensitivity expected to be higher in low-priced compact cars, analysts believe Hyundai's sales benefit from the GST rate cut will be limited compared with competitors such as Maruti Suzuki and Tata Motors. This dynamic could extend the underperformance of Hyundai's domestic volume growth versus market leaders seen in recent months.
December Sales Show Mixed Performance
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 from the 66,840 units sold in November 2025.
| Sales Performance: | December 2025 | November 2025 | Change (MoM) |
|---|---|---|---|
| Total Sales: | 58,702 units | 66,840 units | -12.2% |
| Domestic Volumes: | 42,416 units | 50,340 units | -15.7% |
| Export Volumes: | 16,286 units | 16,500 units | -1.3% |
Despite the sequential decline, exports continued to provide strong 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.
Pune Plant Expansion Creates Near-Term Margin Pressure
The recently commissioned Pune plant is expected to drive nearly 30% capacity expansion for Hyundai. InCred Equities expects the facility to initially produce refreshed versions of the Venue and Exter models, while a new compact car launch is scheduled for FY27F. An India-dedicated electric vehicle planned for CY27F will also be closely monitored by investors.
However, analysts warn that high overheads from the new plant may weigh on EBITDA margins until capacity utilization improves. Citi notes that near-term cost pressures could emerge from the Pune plant start-up, which may add 20% to 25% in overheads.
Analyst Outlook and Ratings
Despite near-term challenges, brokerage firms maintain varied perspectives on Hyundai's prospects:
| Brokerage: | Rating | Target Price | Key View |
|---|---|---|---|
| InCred Equities: | Reduce | ₹2,023 | Market share pressure as key risk |
| Morgan Stanley: | Overweight | ₹3,066 | Margin recovery expected from FY27 |
| Citi: | Buy | ₹2,900 | Prefers Maruti Suzuki and M&M |
Nuvama Institutional Equities expects Q3 revenue to grow in the mid-single digits, supported by better product mix, higher exports, and INR depreciation on a year-on-year basis. The brokerage also anticipates EBITDA margin expansion driven by localization initiatives and lower discounts, though demand outlook and new product timelines remain key monitoring points.
Morgan Stanley has cautioned about potential margin pressure in the second half due to facility ramp-up and higher depreciation, while maintaining expectations for margin recovery from FY27 as volumes increase. After Q2 results, the international brokerage trimmed volume and EBITDA margin estimates by 1% to 3% and 30 to 40 basis points respectively.
Historical Stock Returns for Hyundai Motor India
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.09% | -0.07% | -0.69% | +8.38% | +26.92% | +24.55% |
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