Hyundai Motor India shares surge 5% after Q2 results; Morgan Stanley bullish, but Jefferies warns of downside

Despite Thursday's rally, the stock remains down 14.8 percent in 2026, compared with a 13.2 percent decline in the benchmark Nifty 50 index. Morgan Stanley maintained its 'Overweight' rating with a target price of Rs 2,438, implying nearly 30 percent upside from Wednesday's closing price of Rs 1,879.90. However, Jefferies retained its 'Underperform' rating and cut its target price to Rs 1,630 from Rs 1,725, suggesting approximately 13 percent downside.

Citi maintained its 'Buy' recommendation but lowered its target price to Rs 2,200 from Rs 2,350. Morgan Stanley expects sharp recovery in second half Morgan Stanley expects Hyundai's operating performance to recover sharply in the second half of FY27, supported by improving volumes, margins and market share. The brokerage highlighted the company's upcoming product launches, particularly the Bayon SUV and a new electric SUV, as potential growth drivers.

It described Hyundai's upcoming launches as a 'golden product cycle', which could strengthen the automaker's competitive positioning despite the commodity-related pressures that affected September-quarter profitability. Citi retains Buy despite margin concerns Citi also remains positive on Hyundai's growth prospects, although it reduced its price target by Rs 150 to Rs 2,200. The brokerage highlighted the company's decision to retain its domestic volume growth guidance of 8-10 percent for FY27, suggesting confidence in demand despite the recent earnings disappointment.

Citi expects the Bayon and an upcoming mass-market electric vehicle to support growth. However, it cautioned that commodity inflation and the resulting pressure on operating margins remain significant concerns. Jefferies sceptical about market share recovery Jefferies cited disappointing quarterly earnings and increasing competition in the SUV segment. The brokerage said that Hyundai's EBITDA and net profit declined by approximately 19-24 percent year-on-year, missing estimates.

It also highlighted Hyundai's market share slipping to 12 percent and questioned whether the Bayon would be sufficiently competitive to drive a meaningful recovery. Jefferies' concerns centre on Hyundai's ability to regain lost market share amid intensifying competition, even as the company prepares to introduce new models. Hyundai Q2 results: Revenue rises, profitability weakens Hyundai reported a 23.9 percent year-on-year decline in net profit to Rs 1,196 crore for Q2 FY27, compared with Rs 1,572 crore a year earlier.

Revenue increased 18.5 percent to Rs 20,696 crore, crossing Rs 20,000 crore in a quarter for the first time. However, total expenses rose 24 percent, while material costs surged 29 percent, squeezing profitability. EBITDA declined 18.7 percent to Rs 1,974.5 crore, while the operating margin contracted 440 basis points to 9.5 percent. Domestic sales rose 18.82 percent to 1.66 lakh units, while exports increased 3.7 percent to 53,300 units.

Managing Director and CEO Tarun Garg expects accelerated momentum in the second half, supported by the Bayon, launched on October 26, and a dedicated mass-market electric vehicle scheduled for Q4 FY27.