Q1 2027 Hyundai Motor India Ltd Earnings Call Transcript
Key Points
- Domestic volume grew 5.4% year-on-year despite a supplier fire disruption, with strong April-May momentum of 13% growth.
- Management reaffirmed full-year guidance of 8-10% volume growth for both domestic and export markets, backed by a strong order backlog and production recovery in July.
- Rural contribution hit an all-time high of 26%, with rural sales growing 23.2% year-on-year, driven by expanded rural network and SUV acceptance.
- CNG contribution reached a record 18.2% of domestic sales, supporting CAFE compliance and volume growth.
- Company expects zero penalties under CAFE-2 regulations for FY23-FY27, with full alignment to CAFE-3 draft norms.
- Pune plant third shift is being preponed by two years to October 2026, boosting capacity for the high-demand Venue model.
- Two new model launches (mid-SUV and dedicated EV) in H2 FY27 are expected to drive market share gains and margin improvement.
- EBITDA margin guidance of 11-14% for FY27 remains intact, supported by disciplined pricing and cost optimization.
- Discount levels at 2.8% are lower than the year-ago 3.4%, reflecting a prudent pricing approach.
- Exports are set to recover strongly with new Venue (29 markets), Exter LHD (13 markets), and Verna PE (25+ markets) driving growth.
- Total sales declined 1.3% year-on-year due to a supplier fire incident that disrupted production in June, impacting high-margin models like Creta.
- EBITDA margin fell sharply to 9.3% from 13.3% year-on-year, impacted by lower export volumes, commodity cost pressures, and capacity stabilization costs.
- Export volumes dropped 19.6% year-on-year due to the West Asia conflict and production disruption, with Middle East shipments affected.
- Commodity cost pressures, especially in precious metals and copper, caused a 200 basis point year-on-year impact on margins.
- Employee costs rose 20% year-on-year due to Pune plant commencement and salary revisions, adding to cost pressures.
- Industry growth is expected to moderate to lower single digits in H2 FY27 due to a high base, potentially limiting market expansion.
- The company faces uncertainty in raw material costs and crude oil prices, making future margin visibility challenging.
- Dealer inventory levels were reduced in June due to production disruption, requiring careful rebuilding ahead of the festive season.
- The new EV launch faces profitability challenges, though PLI and localization efforts are expected to mitigate risks.
- Geopolitical risks in the Middle East and shipping disruptions continue to pose challenges to export operations.
Ladies and gentlemen, good day, and welcome to the Q1 FY27 earnings conference call of Hyundai Motor India Limited. (Operator Instructions) Please note that this conference is being recorded.
I now hand the conference over to Mr. Joseph George from IIFL Capital. Thank you, and over to you, sir.
Thank you, [Devin] Good evening, everyone. We welcome you all to the Q1 FY27 earnings conference call of Hyundai Motor India Limited. Today, we have with us Mr. Tarun Garg, Managing Director and Chief Executive Officer; Mr. Wangdo Hur, Chief Financial Officer; Mr. Dong Huwy Park, Chief Operating Officer; Mr. Gopalakrishnan C. S., Chief Manufacturing Officer; Mr. Saravanan T, Function Head Finance; and Mr. K.S. Hariharan, Head of Investor Relations from Hyundai Motor India Limited. I would now like to inform you that the call is being recorded.
I would like to invite Mr. K.S. Hariharan, Head of Investor Relations from Hyundai Motor India Limited. Over to you, sir.
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