Hyundai shares down 20% YTD; Macquarie retains 'Outperform', sees Bayon as growth driver

Shares of Hyundai Motor India Ltd fell 0.86 per cent on Tuesday to settle at Rs 1,854 on BSE, taking their year-to-date (YTD) decline to 19.78 per cent. Global brokerage Macquarie, in its recent note, maintained its 'Outperform' rating on the stock with a 12-month target price of Rs 2,301. Macquarie's target implied a potential upside of around 24 per cent from Tuesday's closing level of Rs 1,854.

The brokerage identified the launch of the new Bayon mid-SUV and the potential introduction of an entry-level electric SUV as key drivers of the company's volume growth in FY28.

Hyundai recently announced the launch of the Bayon at an entry price of Rs 9.99 lakh. According to Macquarie, the pricing positions the model between entry-level SUVs and larger mid-SUVs, including the Hyundai Creta, Maruti Suzuki Victoris and Grand Vitara, and Tata Sierra.

The Bayon's entry price is lower than the Rs 11-12 lakh range for larger mid-SUVs but higher than the Rs 7-8 lakh range for entry SUVs such as the Hyundai Venue, Maruti Suzuki Brezza and Fronx, and Tata Nexon.

Macquarie noted that the Bayon's pricing relative to entry SUVs also reflects the higher 40 per cent goods and services tax (GST) rate applicable to the model, compared with 18 per cent for the latter.

The Bayon is currently available only with a petrol powertrain (manual and electric), according to the brokerage.

Macquarie highlighted the mid-SUV segment as an important growth opportunity for Hyundai. The segment, defined as vehicles measuring 4-4.4 metres in length, accounts for 17 per cent of total passenger vehicle (PV) sales in India. It recorded a compound annual growth rate (CAGR) of 21 per cent between calendar years 2016 and 2025, compared with 6 per cent for the overall industry.

Hyundai dominates the segment, with an approximately 23 per cent market share in the second quarter of FY27, Macquarie noted.

The brokerage sees the Bayon launch as an opportunity for Hyundai to bridge the price gap between the Venue and the Creta. It also pointed to the potential launch of the third-generation Creta in 2027, which should entail a longer wheelbase.

Macquarie added that Hyundai's focus on technology-led product differentiation, including responsive AI, could help the company target younger buyers and create a distinct sub-segment within the mid-SUV market.

However, the brokerage has factored in around 5,000 net monthly units for the Bayon in FY28 estimates, taking into account the risk of cannibalisation of Creta sales.

Another growth opportunity comes from exports. Hyundai Motor will be the sole manufacturer of the Bayon for around 50 developing markets, according to Macquarie, providing an export-led growth opportunity.

Separately, Investec has a 'Hold' rating on Hyundai Motor India shares, with a target price of Rs 2,165. The brokerage noted that a CNG variant of the Bayon could be launched in January next year.