HYUNDAI

Strong Exports Offset Weak Domestic Demand, Eyes Rural Expansion

) reported a mixed Q1 FY26 performance, with earnings beating expectations due to strong export volumes. However, weak domestic demand led to a 5.4% year-on-year (YoY) decline in consolidated revenue. The company's management noted that domestic volumes remain under pressure and are expected to stay subdued in the near term. Export-Led Growth: Exports were a major bright spot, with volumes growing 13% YoY, driven by a significant 28% increase in Africa and 14% in Mexico. HMIL aims for exports to contribute about 30% of its total revenue by 2030, up from 22% in FY25, to diversify its growth. Margin Pressures: Despite cost-reduction efforts, the EBITDA margin contracted by 20 basis points (bps) YoY. This was primarily due to higher discounts, which rose to 3.4% of the average selling price (ASP), and a rise in raw material costs like steel. Strategic Priorities and Future Outlook Rural Expansion: HMIL is aggressively expanding its rural footprint. The contribution from rural markets rose to 22.6% in Q1 FY26, and 7 out of every 10 new outlets are being added in rural areas. Product Roadmap: The company has an aggressive product roadmap, planning to launch 26 new models by 2030, including 20 internal combustion engine (ICE) vehicles and 6 electric vehicles (EVs). Eight of these models are planned for FY26 and FY27. Shift to SUVs: Consumer preference continues to favor SUVs, which now account for a significant 69% of the company's total volumes. The SUV penetration is also strong in rural markets at 68.8%. The company does not foresee a meaningful rebound in the hatchback segment. Valuation: The stock currently trades at 27 times its FY27 earnings, which analysts consider expensive compared to its peer, Maruti, which trades at 22.6x P/E. This high valuation, coupled with soft domestic demand, may cap the stock's near-term upside.