Hyundai Motor India, having filed its draft prospectus for an initial public offer (IPO), demonstrates superior financial metrics in terms of margins and ratios compared to competitors like Maruti Suzuki and Tata Motors.
According to data in the IPO prospectus, Hyundai Motor India’s EBITDA margin for the nine months ending December 31, 2023, was 12.7 percent. This outperformed Tata Motors’ 6.1 percent and was just below Maruti Suzuki India’s 13 percent. Hyundai’s earnings (EBITDA) also surpassed those of Maruti Suzuki and Tata Motors in the passenger car segment.
Hyundai has consistently achieved double-digit operating profit margins over the past few years: 10.4 percent in FY21, 11.6 percent in FY22, and 12.5 percent in FY23. In contrast, Maruti Suzuki’s margins were in single digits for FY21 and FY22 (7.6 percent and 6.5 percent, respectively) before improving to 11 percent in FY23 and 13 percent in FY24. Tata Motors saw EBITDA improvements from 2 percent in FY21 to 6.5 percent in FY24.
The key to Hyundai Motor India’s better metrics is the substantial contribution from its SUVs, especially the successful Creta model known for its higher margins.
In May 2024, the Hyundai Creta led the compact SUV segment with sales exceeding 10,000 units. Over the past six months, the Creta averaged 13,575 units sold per month, compared to Maruti’s Grand Vitara, which averaged 9,708 units. The Creta currently commands a 36 percent market share, whereas the Grand Vitara holds 25.92 percent.
Analysts note that within the Creta lineup, sales are predominantly skewed towards the top-end or mid-segment models rather than the base model. This trend towards premiumization and higher sales of premium models generally enhances profit margins for the company.
Hyundai’s Return on Capital Employed (RoCE) and net worth for FY23 were 27 percent and 26 percent, respectively, higher than Maruti’s 17 percent and 14 percent, Tata Motors’ 9 percent and 13 percent, and Mahindra & Mahindra’s (M&M) 18 percent and 16 percent.
However, M&M’s financial disclosures combine automotive operations across passenger vehicles, LCVs, three-wheelers, and MHCVs, making direct comparisons with Hyundai challenging. While Hyundai shows strong performance in the passenger vehicle segment, M&M’s broader financial reporting prevents a direct assessment of its performance specifically in the passenger vehicle segment.
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