Hyundai Motor India - Well-Diversified Franchise; Profitability Transcends Peers: ICICI Securities

ICICI Securities Report

Hyundai Motor India Ltd. is a well-diversified passenger vehicle player with a robust portfolio, strong domestic distribution, stable margin along with a steady exports franchise. Hero Motor India Ltd. sports ~60% utility vehicles in its volume mix (versus ~40% for Maruti Suzuki India Ltd.); that said Maruti Suzuki’s FY23 Ebitda is ~1.5 times Hero Motor India’s despite Maruti Suzuki's domestic PV market share being at ~41% versus Hero Motor India's 16%.

Driven by ~35–40% superior average selling price and better Ebitdam, Hero Motor’s Ebitda/unit is ~50% higher versus Maruti Suzuki, with gross profit/unit being ~35% superior.

In terms of domestic distribution, Hero Motor is operating with ~1,366 sales touch points versus Maruti Suzuki's 3,640 – Maruti Suzuki’s sales/touchpoint being ~15% superior in volume terms, at ~470 units.

With better cash management, superior free cash flow/unit for Hero Motor (~3–4 times), stable and superior Ebitdam (~12–13%), Hero Motor’s return on capital employed is ~25–28% versus ~18–20% for Maruti Suzuki.

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