Hyundai Motor India's shares fell by 5%, trading at ₹1,714 early on November 13, after the company reported weaker-than-expected performance in the second quarter. This marks the third consecutive day of losses for the auto giant, signalling a challenging phase for the company in the competitive Indian automotive sector. The recent decline in Hyundai's share price highlights growing concerns in the share market investment sector.
Hyundai’s Q2 results overview
Hyundai Motor India, the country's second-largest carmaker with a 15% market share, recently published its first earnings report since its October listing. The company reported a consolidated net profit of ₹1,375 crore in the second quarter, reflecting a 16% decrease from ₹1,628 crore during the same period last year. This dip in profit was largely attributed to lower domestic sales and a downturn in exports, both affected by ongoing geopolitical challenges.
Despite the headwinds, Hyundai reported profitability for the first half of FY 2024-25, largely due to a focused cost-control approach. Hyundai's Managing Director, Unsoo Kim, commented, "We are also gearing up to launch the Creta EV for the mass market in the coming months, which we believe will be a game changer in the EV space."
Passenger vehicle sales in Q2 FY 2024-25
Hyundai recorded total passenger vehicle sales of 1,91,939 units in Q2 FY 2024-25. Domestic sales accounted for 1,49,639 units, marking a 5.75% decline compared to last year. Exports also slowed, with only 42,300 units shipped abroad, further impacting the company’s overall performance and share market investment outlook.
Hyundai’s recent IPO and stock market performance
Hyundai Motor India made headlines in October with a $3.3-billion IPO, the largest in India’s primary share market history. However, the stock struggled from the start, debuting at a 1.32% discount at ₹1,934 on the NSE, below its IPO price of ₹1,960. Since listing, the stock has shown limited recovery, affected by weak quarterly performance and broader industry challenges impacting share market investment in the automotive sector.
Auto sector under pressure
Hyundai is not alone in facing a downturn; the entire automotive sector has been affected by weak demand and rising costs. Major automakers like M&M, Maruti Suzuki, and Tata Motors have also experienced stock declines, reflecting broader sentiment challenges. The NIFTY Auto index was down by 2% around 10:30 AM. Since the start of the year, the overall NIFTY has gained 13%, but NIFTY Auto has risen an impressive 23%. This shows that the sector has had mixed performance for investors in the stock market.
Impact of weaker earnings across OEMs
In line with Hyundai's weaker Q2 performance, many original equipment manufacturers (OEMs) have struggled to meet expectations. Some, like Bajaj Auto, have even revised their guidance downward. Last month, Bajaj cut its guidance to a modest 5% growth target, illustrating the challenges automakers face amid high financing costs and inflationary pressures. These are the key factors impacting the share market investment appeal of automotive stocks.
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