Hyundai Motor India Profit Falls 23.9% Despite Record Quarterly Sales
Key Facts
Hyundai Motor India on October 28 approved its unaudited results for the second quarter and first half of fiscal year 2026-2027, reporting consolidated net profit of 11,962 million rupees, down 23.9% year on year. The decline came despite an 18.5% rise in revenue from operations to 206,961 million rupees, compared with 174,608 million in the corresponding period. Profit after tax, meanwhile, rose 35% from the previous quarter, according to the earnings call transcript. The company recorded its highest-ever total quarterly sales, with growth in domestic activity and exports. The stock rose in early Thursday trading after closing Wednesday at 1,879.90 rupees, while the figures showed a divergence between sales growth and pressure on profitability.
Total sales reached 219,072 units in the quarter, up 15% year on year and 23% from the previous quarter, according to the company’s statement. Domestic sales volumes grew 19% on both comparisons, while the company’s rural penetration reached a record 26.6%. Compressed natural gas vehicles also posted a record quarterly share of 19.1% of the sales mix. On the export side, shipments rose 4% year on year and 38% quarter on quarter, despite geopolitical challenges. These indicators show that revenue growth was driven by expanding domestic and overseas sales, while profit remained below its level a year earlier.
Cost pressures were among the factors cited by management to explain the contraction in margins. The head of investor relations said commodity cost inflation affected the margin by about 400 basis points year on year and about 250 basis points compared with the previous quarter. He added that the company had tried to limit the impact through localisation, value engineering and price increases. The earnings before interest, taxes, depreciation and amortisation margin fell to 9.4% in the first half, from 13.6% in the corresponding period a year earlier. Meanwhile, profit before and after tax rose 35% quarter on quarter, reflecting an improvement from the previous quarter without erasing the annual decline in profit.
Management said it remained difficult to estimate the impact of raw materials in the third quarter because prices were moving in different directions: precious metals were trending lower, while copper and plastics continued to rise. A company official said, "Precious metals and so on have seen a downward trend, while copper and plastics continue to rise." Management added that it was monitoring these trends and would take measures to protect margins. On the earnings call, Chief Executive Tarun Garg said the company was targeting annual domestic sales growth of between 8% and 10% for fiscal year 2027. He added that the company was confident it would outgrow the sector in the second half, with momentum expected to accelerate during that period.
Analyst ratings diverged after the results. Morgan Stanley maintained its Overweight rating and a price target of 2,438 rupees per share, while Jefferies retained its Underperform rating and cut its target to 1,630 rupees from 1,725 rupees. Citi maintained its Buy recommendation but cut its price target to 2,200 rupees from 2,350 rupees. Moneycontrol cited concerns about competition in the sport utility vehicle segment, and estimated that the stock was down 14.8% year to date in 2026 at the time of its report. The report compared this with a 13.2% decline in the Nifty 50 over the same period, placing the stock’s annual performance in a weaker context than the index.
On products, the company said the launch of the Bayon marked the start of a "golden product cycle" and was expected to support momentum in the second half. It is also preparing to launch an electric vehicle designed for the mass market in the fourth quarter of fiscal year 2027. Garg said the company was committed to raising the share of its eco-friendly powertrain ecosystem to more than 50% over the next four to five years. The second-half plan combines a domestic sales growth target with product expansion, while management continues to monitor raw material costs to protect margins. The electric vehicle launch in the fourth quarter of fiscal year 2027 is the clearest milestone in these plans.