Hyundai Motor India shares cross IPO price after UBS gives it their highest price target

Shares of Hyundai Motor India Ltd. opened with gains of 2% on Monday, June 16, after Swiss investment bank UBS initiated coverage on the stock.

UBS initiated coverage on Hyundai Motor India with a 'Buy' recommendation and a price target of ₹2,350, which implies a potential upside of 21% from Friday's closing levels. This is also the highest price target for the company on the Street.

The brokerage firm wrote in its note that Hyundai Motor India's (HMIL) capacity expansion will drive a strategic shift. HMIL, a subsidiary of Hyundai Motor Company (HMC), is India's second-largest passenger vehicle (PV) manufacturer by volume, expected to reach this position by FY25.

HMIL's strategy, which focuses on optimisation, is set to gain traction with the upcoming launch of its Maharashtra plant, leading to a 30% increase in capacity. UBS expects this expansion to boost both domestic and export momentum, particularly in the SUV segment.

The brokerage projects domestic volume growth of 10% during FY26-28, compared to just 2% from FY19-25, with potential to expand its dealer network.

UBS also expects HMIL's export volume to grow by 11% in FY26-28, compared to flat volume growth in FY19-25, positioning India as a global hub for Hyundai production. The brokerage also forecasts a 16% CAGR in EBITDA for FY26-28, driven by improved product mix and operating leverage.

Key risks, as per the brokerage, include HMIL's overreliance on the Creta for profitability and the potential for missteps in future product launches.

HMIL has been at the forefront of driving premiumisation in the Indian market, consistently ahead of competitors in introducing new technologies and upgrades. Notable innovations include launching the mid-sized SUV segment with the Creta and popularising features like sunroofs, GDi engines, DCT gearboxes, and ADAS.

These advancements reflect Hyundai's recognition of growing consumer demand for premium features, and UBS expects the company to continue leading in technology adoption.

Despite underperforming in volume growth over the past decade, HMIL has kept pace with industry revenue and operating profit growth. Hyundai’s average selling price (ASP) has seen a strong 7% CAGR, led by SUVs and premiumisation, an industry-leading figure.

Even though Hyundai has a smaller scale than Maruti and a weaker portfolio positioning compared to M&M, its EBIT margin has consistently been higher than both competitors. While the mix enhancement is expected to moderate and commodity tailwinds have subsided, UBS still forecasts EBITDA margin expansion for FY26-28, driven by operating leverage and an increasing share of exports.

UBS values HMIL at 18x FY27E EV/EBITDA, in line with Maruti's average multiple over the past 10 years. Despite Maruti’s larger scale, UBS believes that HMIL’s strong product positioning, faster time to market, and strategic growth shift will support better long-term growth.

Out of the 24 analysts that have coverage on Hyundai Motor India, 20 of them have a 'Buy' rating on the stock, one say 'Hold', while three others have a 'Sell' rating.

Hyundai Motor India, which happens to be the largest IPO of the country till date, recently crossed its IPO price of ₹1,960 on June 9. The stock hit a new all-time high of ₹1,984.80, marking its biggest single-day gain in nearly three months.

Hyundai Motor India shares are currently trading 0.79% higher on Monday at ₹1,955.80. The stock is up nearly 10% so far in 2025.

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