• Hyundai Motor India's shares have dropped over 10% from its IPO price due to disappointing Q2 performance.
• The company's consolidated profit fell by 16% YoY, primarily due to low domestic sales.
• Despite the slump, Hyundai remains a significant player in the Indian automobile market, holding a 14% market share as of June 2024.
• The company's future trajectory will depend on its ability to navigate broader market challenges and capitalize on opportunities in the EV market.

Hyundai Motor India, one of the country's leading automobile companies, has seen a significant drop in its share prices, slipping more than 10% from its Initial Public Offering (IPO) price. The shares, which were listed at Rs 1,931 apiece, closed at Rs 1,745, marking a decline of 3.37% at closing on Wednesday. This downward trend has been consistent since the company's listing on October 22.

The slump in the stock price is largely attributed to the company's disappointing performance in the second quarter of the financial year 2024-25. Hyundai Motor India released its results on Tuesday, revealing a 16% year-on-year decline in consolidated profit. The profit, which stood at Rs 1,628 crore in the same period a year ago, fell to Rs 1,375 crore.

The company's poor performance is primarily due to low domestic sales. In October 2024, Hyundai Motor India sold 55,568 vehicles in the domestic market, a figure that pales in comparison to the average market growth. In the same period last year, the company had sold 55,128 vehicles, marking only a 0.80% increase on an annual basis.

Analysts' Take on Hyundai's Performance

InCred Equities, in its note, expressed disappointment with Hyundai's maiden quarterly results post-IPO. The automaker's Profit After Tax (PAT) dipped 16% YoY and 8% QoQ to Rs 13,800 crore in Q2, on an 8% YoY sales decline. The note further stated, Considering the weak Q2 financial performance, it will be difficult to justify Hyundai's premium valuation over leader Maruti Suzuki. Maintain Reduce.

Despite the current challenges, Hyundai Motor India remains a significant player in the Indian automobile market. The company launched the country's biggest IPO last month, with a size of Rs 27,870 crore. As the second-largest car company in India, after Maruti Suzuki India, Hyundai Motor India held a market share of around 14% in June 2024. In the financial year 2023-24, the company sold 7.77 lakh vehicles, 21% of which were exported to countries like Latin America, Africa, the Middle East, and Europe.

The company's Managing Director, Unsoo Kim, has expressed optimism about the future, stating, We will be launching the Creta EV for the mass market in the coming months, and we expect it will be a game changer in the EV market. He further added that the company expects a sustained demand momentum in the industry in the mid to long term, despite the current slowdown in overall sales volume.

However, the company's performance is not an isolated incident. The second quarter of 2024 has seen a slowdown in urban demand across various sectors, including FMCG, retail, auto, and mall operators. Chemicals and consumer durables have also seen a moderation in demand.