Hyundai Motor India Limited — Q2 FY26 earnings call

Call held 30 Oct 2025

Management summary

Hyundai delivered strong margin expansion (13.9% EBITDA, +110bps YoY) despite domestic volume decline, driven by favorable product/export mix and disciplined cost management. The company refrained from joining industry discount wars, prioritizing quality of sales over market share. GST 2.0 reforms created strong demand surge with festive retails up 23%. Pune plant commissioning (October 2025) will cause near-term margin pressure from incremental costs but supports long-term growth strategy. New Venue launch on Nov 4 is the first of 26 launches planned over 5 years, marking the start of a strong product cycle.

Highlights

  • Total sales 190,921 vehicles; domestic 139,521 (down YoY from 149,639); exports grew 21.5% YoY

  • Revenue Rs 17,461 crores vs Rs 17,260 crores in Q2 FY25

  • EBITDA Rs 2,429 crores at 13.9% margin vs 12.8% in Q2 FY25 - 110bps improvement

  • PAT Rs 1,572 crores at 8.9% margin vs 7.9% in Q2 FY25

  • Festive retail grew 23% (Navaratri to Diwali); Exter+Venue grew 28%

  • SUV mix at record 71% of domestic volumes; rural penetration at record 23.6%

  • Pune plant vehicle production commenced October 2025; 20-25% incremental cost impact on depreciation/labor/overheads

  • Localization at 82%, targeting 90% by FY30; value engineering driving 110bps material cost improvement

  • Discounts at 3.2% of ASP, believed to have peaked; disciplined approach vs industry price wars

  • All-new Venue launched November 4, 2025 - expected catalyst for market share recovery

Key financials

  1. Revenue from Operations ₹17,461 Cr +1.2%YoY
  2. EBITDA ₹2,429 Cr +10.1%YoY
  3. EBITDA Margin 13.9%
  4. PAT ₹1,572 Cr +14.3%YoY
  5. PAT Margin 8.9%
  6. EBIT ₹1,911 Cr +13.3%YoY
  7. EBIT Margin 10.9%
  8. Total Sales Volume 1,90,921 vehicles -0.5%YoY
  9. Domestic Sales 1,39,521 vehicles -6.8%YoY
  10. Export Volume Growth 21.5%
  11. SUV Mix (Domestic) 71%
  12. Rural Penetration 23.6%
  13. Discount as % of ASP 3.2%
  14. Localization Level 82%
  15. Royalty 2.8%
  16. Channel Inventory 3.25 weeks
  17. First-time Buyers Share 40%

What they filed

Q1 FY27: revenue down 1.0%, net profit down 33.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue16,876 16,242 17,562 16,025 17,061 +1%17,453 +7%18,452 +5%15,865 −1%
EBITDA2,138 1,825 2,489 2,135 2,383 +11%1,960 +7%1,915 −23%1,447 −32%
Net profit1,338 1,124 1,583 1,336 1,570 +17%1,195 +6%1,222 −23%883 −34%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Exports

  • FY26 Export Growth Exports · FY26 · High confidence Will exceed original 7-8% guidance
    We expect that we will be in a position to exceed the guidance we had originally indicated during the beginning of the year.

    — K S Hariharan

Costs

  • Pune Plant Cost Impact Costs · Near-term from Oct 2025 · High confidence 20-25% increase in depreciation, labor, and overheads over Chennai levels
    There should be an increase of around 20% to 25% in the cost of these elements, over the current levels in Chennai Plant.

    — K S Hariharan

Localization

  • Localization Target Localization · FY30 · High confidence 90% by FY30
    Our aim is to reach 90% by FY'30. Our focus is on high technology parts - electrical sensors, hardwares, premium car parts and electronic parts.

    — Gopala Krishnan C S

CAPEX

  • Mid-term CAPEX CAPEX · 5 years · High confidence Rs 45,000 crores (40% product, 40% capacity/localization)
    The mid-term guidance is Rs 45,000 crores. 40% for product-related investments for 26 launches. Another 40% for capacity expansion, localization, systemization.

    — K S Hariharan

Product

  • EV Launch Product · Calendar 2027 · High confidence Fully dedicated EV for India
    In 2027, we will come out with a fully dedicated EV for us.

    — Tarun Garg

Risks & concerns

  • Pune plant startup costs pressuring margins near-term

    medium

    Depreciation, labor, factory overheads will increase. Timeline for margin recovery not specified. 'Short-term pain for long-term gain.'

    Management acknowledged 20-25% incremental cost impact; confident of managing through volume ramp-up and exports

  • Domestic market share decline during Venue transition

    medium

    Domestic sales declined 6.8% YoY. Channel inventory at 3-3.5 weeks (low). Old Venue stock nearly exhausted.

    Analyst temporary; new venue launch nov 4 marks start of 26-model pipeline over 5 years

  • Nexperia e-component supply disruption

    medium

    Industry-wide electronic component issue. HMI has near-term inventory but needs continuous monitoring.

    Analyst monitoring; some inventory buffer for near-term; working with vendors

  • Industry discounting war

    medium

    Industry giving aggressive price cuts over and above GST reductions. Hyundai maintaining discipline but watching landscape.

    Analyst disciplined approach; refrained from pre/post-gst price cuts; believes discounts have peaked

Q&A highlights

4 direct
Market Share Recovery and Venue Launch Direct
The new Venue should help us get back into the growth phase starting November. We believe in quality of sales, balance between volume and profit. We refrained from price wars.

Venue is 2nd highest volume model; transition constrained availability. New launch expected to reverse domestic market share erosion.

Asked by Kapil Singh (Nomura)

Discount Trajectory Direct
It seems that the discounts for us have peaked out. Pre-GST, OEMs offered post-GST prices. We refrained. Post-GST, some cut prices further. We refrained.

Disciplined pricing strategy differentiates Hyundai; 3.2% discount as % of ASP with discounts believed to have peaked signals margin sustainability.

Asked by Binay (Morgan Stanley)

GST 2.0 Impact on Consumer Behavior Direct
80% of car buyers used tax relief to switch to better model, brand or premium add-ons. 46% shifted from hatchbacks to SUVs. First-time buyers for Hyundai increased from 29% to 40%.

GST reform is creating structural demand shift toward SUVs and premiumization, benefiting Hyundai's SUV-heavy portfolio.

Asked by Vipul Agrawal (HSBC)

Material Cost and Localization Direct
110bps profitability improvement from material cost reduction. Localization from 78% to 82%. Targeting 90% by FY30 including deep localization till Tier 3.

Continuous localization + value engineering is a structural margin driver; 90% target by FY30 suggests multi-year cost benefit runway.

Asked by Amyn Pirani (JP Morgan)

1 min read 3 chapters

Detailed narrative

Margin Quality Over Volume - Disciplined Strategy

Hyundai delivered 13.9% EBITDA margin despite domestic volume decline, demonstrating its quality-over-volume approach. The company explicitly refrained from joining pre-GST and post-GST price wars. Discounts at 3.2% of ASP have peaked per management. Material cost improvements of 110bps from localization (78% to 82%) and value engineering are structural. Royalty at 2.8%. First-time buyers at 40% (up from 29% five years ago) with ASP continuing to rise.

Pune Plant and Growth Trajectory

Vehicle production commenced at Pune plant October 2025, supporting the dual growth strategy of domestic + exports. Near-term margin headwind of 20-25% incremental costs on depreciation/labor/overheads. New Venue is the first model from Pune. Rs 45,000 Cr mid-term CAPEX covers 26 launches (40%) and capacity/localization (40%). Localization targeting 90% by FY30 including Tier 2-3 deep localization. Dedicated India EV planned for calendar 2027.

GST 2.0 and Market Dynamics

GST 2.0 created a unique demand surge - 37 days of postponed purchases followed by a massive festival season (retails +23%, Exter+Venue +28%). This created temporary logistics bottlenecks and Vahan registration discrepancies that will normalize over 1-2 months. SUV penetration at record 71% with rural at record 23.6%. Export momentum very strong at +21.5% with Middle East & Africa +35%. Full year exports expected to exceed original 7-8% guidance.

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