Hyundai Motor India Ltd stock is currently trading at ₹1,768, reflecting a 2.01% drop as of 11:42 a.m. on October 29, 2024. With a market capitalization of ₹1,43,617 crore, Hyundai remains a dominant player in the automobile sector. The stock has demonstrated considerable stability, with a 52-week high of ₹1,970 and a low of ₹1,761, showing resilience amidst market volatility.
The stock's Price-to-Earnings (P/E) ratio stands at 23.8, indicating it is trading at a premium relative to its earnings. With a Book Value per share yet to be disclosed, investors consider other valuation metrics. Hyundai’s Return on Capital Employed (ROCE) is at an impressive 51.2%, while the Return on Equity (ROE) is 39.4%, both indicators of efficient management and profitability. However, the dividend yield is currently at 0%, suggesting that the company has not distributed dividends, possibly reinvesting earnings for growth or debt repayment.
In the latest quarter, ending June 2024, Hyundai reported consolidated sales of ₹17,344 crore, a slight increase from ₹16,624 crore in June 2023. Expenses also saw a rise from ₹14,626 crore to ₹15,004 crore over the same period, but operating profit surged to ₹2,340 crore from ₹1,997 crore, marking a rise in operational efficiency. Operating Profit Margin (OPM) improved from 12% to 13%, highlighting better cost management. The net profit for this quarter stood at ₹1,490 crore, up from ₹1,329 crore the previous year. Earnings per share (EPS) remains strong at ₹18.33, reflecting steady earnings for shareholders.
Reviewing Hyundai's financials from March 2021 to March 2024 showcases consistent growth. Sales increased from ₹40,972 crore in 2021 to ₹69,829 crore in 2024, an indicator of demand and market capture. Operating Profit Margins rose gradually, standing at 13% in both 2023 and 2024, up from 10% in 2021. This shows the company’s focus on enhancing operational efficiency alongside revenue growth. Net Profit has more than tripled from ₹1,881 crore in 2021 to ₹6,060 crore in 2024, a promising growth trajectory. Dividend Payout, however, has been inconsistent, with a high of 229% in 2023, reduced to 178% in 2024, possibly indicating an adjustment in cash flow management.
Hyundai’s compounded sales growth over the past three years stands at 19%, while the trailing twelve-month (TTM) growth is 16%. Compounded profit growth over three years is a significant 48%, with a TTM rate of 28%. The company’s Return on Equity (ROE) over the last three years is 27%, with a notable increase to 39% in the latest year. These metrics reflect robust profitability and indicate the company's effective resource utilization.
Hyundai's balance sheet as of March 2024 reflects a stable financial structure. Total liabilities stand at ₹26,349 crore, with borrowings reduced to ₹833 crore from ₹1,354 crore in 2021, indicating a reduction in debt burden. Reserves, however, have seen a decrease from ₹19,242 crore in 2023 to ₹9,853 crore in 2024, possibly indicating reinvestment in business expansion or asset acquisition. Fixed assets have remained consistent, increasing to ₹7,614 crore, while other assets are at ₹18,082 crore.
Hyundai's cash flow has shown fluctuations over the past few years. Cash from operating activities has increased significantly to ₹9,252 crore in 2024, compared to ₹5,423 crore in 2021, showing strong cash generation from core operations. Investing activities, however, show a significant outflow, with ₹10,090 crore in 2024, suggesting substantial capital investments or acquisitions. Financing activities reflect a substantial cash outflow of ₹15,930 crore in 2024, which may involve debt repayments or dividend distribution adjustments. The net cash flow, as a result, turned negative to ₹-16,768 crore in 2024, compared to a positive cash flow of ₹3,342 crore in 2021, possibly affecting liquidity management.
Hyundai’s efficiency metrics highlight a well-managed cash cycle. Debtor days have decreased to 13 in 2024, indicating prompt collection from customers. Inventory days have also reduced to 23, enhancing inventory turnover. The cash conversion cycle stands at -16, an indicator of efficiency in managing working capital. Negative working capital days, decreasing from -26 in 2021 to -30 in 2024, demonstrate the company’s ability to generate cash quickly, which is advantageous in sustaining liquidity.
As of October 2024, Hyundai's shareholding pattern reveals strong promoter control, with promoters holding 82.5% of shares. Foreign Institutional Investors (FIIs) hold 7.36%, Domestic Institutional Investors (DIIs) account for 5.77%, while public shareholders hold 4.37%. This structure indicates solid backing by institutional investors, likely contributing to market confidence. A substantial promoter stake typically implies stability and confidence in the company’s management.
The chart shows Hyundai’s stock price trending near its lower end, around ₹1,768, after peaking at ₹1,970. The 50-day moving average (DMA) is slightly above the current price, suggesting a mild bearish trend. The 200 DMA remains stable, hinting at long-term stability, despite recent volatility. Trading volumes reveal that buying interest fluctuates, though significant dips have been observed, potentially due to profit-taking activities. Investors might view this as an entry point if they anticipate a price recovery aligned with Hyundai’s strong fundamentals.
Hyundai operates in a competitive automobile market, contending with brands such as Maruti Suzuki, Tata Motors, and Mahindra & Mahindra. Its operational efficiencies, demonstrated by strong ROCE and ROE figures, give it an edge. Despite zero dividend yield, Hyundai’s focus on reinvestment and debt reduction is likely seen positively by growth-focused investors. Additionally, the auto industry is undergoing rapid transformation, with electric vehicles (EVs) and sustainability initiatives potentially shaping Hyundai's future market strategy. Hyundai’s investments in EV technology and manufacturing efficiency could position it favourably against its competitors.
Hyundai’s growth prospects remain promising given its revenue trajectory, cost efficiencies, and expanding market share. The automobile industry’s shift towards EVs and autonomous driving solutions aligns with Hyundai’s potential investments. However, challenges include fluctuating raw material costs, regulatory changes, and evolving consumer preferences. Hyundai’s capital expenditure and R&D investments will be critical to maintaining its competitive position.
Geopolitical factors and currency fluctuations also pose risks, especially as Hyundai operates globally. Economic conditions, particularly interest rates and inflation, could impact consumer demand and operational costs. Hyundai's capacity to manage these risks while exploring growth avenues such as EVs and AI-driven technologies will influence its market performance.
Hyundai Motor India Ltd exhibits strong fundamentals, reflected in its high ROCE and ROE values, consistent profit growth, and operational efficiency. For long-term investors, the stock’s current price offers potential entry, especially if Hyundai continues to leverage its market position and focus on innovation. The stock’s low dividend yield may deter income-focused investors, but growth-oriented investors might see value in Hyundai’s reinvestment strategy and robust balance sheet.
For existing investors, holding could be beneficial, given Hyundai’s demonstrated resilience and potential for further expansion, especially with EV developments. Monitoring quarterly performance, especially revenue growth and profit margins, will be key in making future decisions. As Hyundai adapts to industry changes, the stock’s performance will depend on its ability to balance growth initiatives with operational stability, making it a viable consideration for a hold strategy.