With Hyundai Motors India’s largest IPO and subsequent listing on Tuesday, October 22, the automotive industry has been in the spotlight.
A crucial query for long-term investors is which passenger car manufacturer—Hyundai Motor or Maruti Suzuki—should they pick in the long run, given the auto giant’s stock market debut.
Hyundai Motor Stock Price Trend
On October 22, Hyundai Motor’s shares made a quiet market debut, listing on the NSE at ₹1,934, 1.3% below the issue price of ₹1,960. In the meantime, the stock was down 1.5% on the BSE, trading at ₹1,931. However, the shares closed the previous day at ₹1.820.40, more than 7% below its issue price.
On Wednesday, October 23, Hyundai shares increased 6% during intraday trading to reach a high of ₹1,928.15.
The IPO is the biggest public offering in India to date, with a valuation of ₹27,870.16 crore. Subscriptions were accepted from October 15 until October 17. The price of each share in the public offering was between ₹1,865 and 1,960. After three days of bidding, the Hyundai Motor IPO finished with a respectable but lower-than-expected demand, receiving 2.37 times bids. During the three days of bidding, the retail investor and non-institutional investor groups were not completely subscribed. The IPO was an offer for sale (OFS) of 14.22 crore shares with no fresh issue component.
In the meantime, Maruti’s stock price has increased 13.5% over the past year, indicating a respectable performance. The stock of India’s largest automaker has increased by 16% so far in 2024. After rising 6.7% in September, it lost about 10% in October.
The car stock is almost 13% off its August 2024 peak of ₹13,675 as of its most recent closing of ₹11,920.90. In the meantime, it has risen more than 22% since January 2024, when it hit a 52-week bottom of ₹9,738.40.
Hyundai Motor vs Maruti Suzuki: Which is a better bet?
Experts offer differing opinions when comparing Hyundai Motor India and Maruti Suzuki as long-term investment prospects. Though they each face different chances and difficulties, both automotive giants have cemented their positions in the Indian industry. Let’s examine the specifics.
Hyundai is preferred above Maruti by Mumuksh Mandlesha, Research Analyst at Anand Rathi Institutional Equities. He believed that Hyundai’s favourable SUV mix (Hyundai 63% vs. Maruti 36%) would help the company prosper in the long run.
“SUVs are expected to grow faster in comparison to hatchbacks, which would support structurally better growth over the longer term. But as seen in FY24 or YTD FY25, there has been hardly any difference in their growth due to better model launches by Maruti, which indicates the importance of model launches as they can change the view over the medium term. In terms of return ratio profile as well, Hyundai stands out versus Maruti,” Mandlesha added.
However, domestic broking Emkay has “reduced” calls on both auto companies, but believes Maruti is more vulnerable. Its target price for Maruti is ₹11,200, which indicates a 6% decline, and its target price for Hyundai is ₹1,750, which indicates a 4% potential decline.
With a “REDUCE” rating and a target price of ₹1,750, Emkay began covering Hyundai Motor India (HMIL). Like Maruti Suzuki (MSIL), it was valued at roughly 23x core Sep-26E PER. A modest 5% EPS CAGR over FY24-27E is anticipated despite HMIL’s strong presence in India because of the company’s limited big launches, muted capacity growth, increased royalty expenses, and lower treasury income.
Due to reasons including the small-car recovery and the introduction of new models, Emkay favours MSIL over HMIL because of its more diverse product and powertrain mix, greater growth potential, and stronger revenue and EPS CAGRs.
Despite having a smaller scale, the broking observed that Hyundai Motor India’s superior mix and premium positioning helped it exceed Maruti Suzuki in terms of profitability. To expand EV manufacturing and supply chains in Tamil Nadu and Maharashtra, Hyundai is investing ₹320 billion. It is anticipated that the company’s emphasis on high levels of localisation and the launch of an EV-specific platform will lower expenses and improve pricing competitiveness, the broking estimates.
Broking firm Motilal Oswal, meanwhile, has a buy call on both of the main automakers but believes Hyundai has greater potential than Maruti. Its goal price for Maruti is ₹15,160, which indicates a 27% upside, and its target price for Hyundai is ₹2,345, which indicates a 29% upside potential.
With 87% of the Indian passenger vehicle (PV) market, Hyundai Motors India (HMI) has a significant market presence, according to Motilal Oswal. HMI said it benefits from the R&D and supply chain assistance of its parent company, Hyundai Motor Company, which holds dominating shares in important segments, such as mid-size and compact SUVs. The second-largest PV exporter in India, HMI, is expected to grow at a 17% EPS CAGR between FY25 and FY27.
MOSL gives HMI a marginal advantage over Maruti Suzuki due to its technological strength, solid financials, and conformity to market trends.
In the meantime, it anticipates that Maruti will continue to dominate the passenger vehicle (PV) market and surpass industry growth in FY25. According to MOSL, MSIL’s enlarged lineup, which now includes the Invicto, Brezza, and Fronx, enhances its position in the PV market, which is now 50% SUVs. Battery electric cars (BEVs) will account for 15% of MSIL’s domestic sales by FY31, while hybrids will account for 25%. According to the broking, Maruti Suzuki India is anticipated to expand its margin by 140 basis points to around 13 per cent by FY26, even though the majority of the gains associated with input costs are probably going to end. With a better product mix and possible government measures that favour hybrids, it forecasts a 15% earnings CAGR for FY24–26E.
In conclusion, the decision between Maruti Suzuki and Hyundai Motor India for a long-term investment depends on their respective growth possibilities. Hyundai is well-positioned for significant future growth thanks to its expertise in SUVs and emphasis on electric vehicles (EVs). On the other hand, Maruti Suzuki continues to dominate the market thanks to its varied portfolio and impending releases, particularly in the small and hybrid car segments. All things considered, Maruti’s market dominance guarantees consistent performance, while Hyundai’s emphasis on SUVs and EVs may provide superior long-term growth.
