Hyundai’s Q2 revenue hits record, but rising costs squeeze profits for third straight quarter

NEW DELHI: Hyundai Motor India Ltd’s revenue crossed ₹20,000 crore for the first time in the September quarter, but rising commodity costs continued to erode profitability, leaving the car maker dependent on price increases, easing input costs and new-model sales to restore margins. Net profit fell for a third consecutive quarter, putting its full-year margin guidance under pressure.

The Gurugram-based company reported a 24% year-on-year decline in net profit to ₹1,196 crore for the July-September quarter of fiscal year 2027 (Q2FY27), as earnings before interest, tax, depreciation and amortization (Ebitda) margin contracted to 9.5%.

Revenue, by contrast, rose 19% to ₹20,362 crore, supported by stronger domestic demand and a recovery in exports compared with previous quarters. Total sales grew 15% to 219,072 units. Domestic sales increased 19% to 165,772 units, while exports rose 4% to 53,300 units.

Quick answers to key questions

•5 QUESTIONS

1

Why did Hyundai Motor India’s profit fall in Q2FY27 despite record revenue?⌵

Net profit fell 24% year on year to ₹1,196 crore as higher raw-material costs squeezed profitability. Revenue rose 19% to a record ₹20,362 crore, but Ebitda margin contracted to 9.5%.

2

How much did commodity inflation affect Hyundai’s Q2FY27 results?⌵

Hyundai said raw-material cost inflation had an impact of around 400 basis points year on year. The company cited commodity costs as a major reason for the decline in profit.

3

When does Hyundai plan to increase vehicle prices?⌵

Hyundai plans to raise vehicle prices in January. It is also considering an earlier increase if commodity costs remain elevated.

4

Can Hyundai meet its full-year Ebitda margin guidance?⌵

Hyundai’s full-year Ebitda margin guidance is 11–14%, while its margin was 9.3% in the June quarter and 9.5% in the September quarter. It will need a stronger recovery in the second half to meet the target.

5

How did Hyundai’s domestic sales and exports perform in Q2FY27?⌵

Total sales rose 15% to 219,072 units. Domestic sales increased 19% to 165,772 units, while exports rose 4% to 53,300 units.

“Cost headwinds continue to pose challenges to profitability. However, improved business outlook coupled with prudent pricing and cost control measures provide confidence for a healthy margin trajectory in H2. Our endeavour is to take appropriate measures to achieve Ebitda margin guidance for the full year,” Tarun Garg, managing director and chief executive at Hyundai India, said during a post media conference call on the results.

The company has guided for a full-year Ebitda margin of 11-14%. With the margin at 9.3% in the June quarter and 9.5% in the September quarter, Hyundai will need a stronger recovery in the second half to meet that target.

The margin pressure and guidance weighed on investor sentiment. Hyundai shares rose 0.3% on Wednesday, underperforming the Nifty Auto index, which gained 1.45%.

Raw-material inflation was a key drag on earnings.

“The commodity impact was a major reason for the profit decline on a year-on-year basis. We had actually an impact of around 400 basis points due to raw material cost inflation on a year-on-year basis,” KS Hariharan, head of investor relations at Hyundai Motor India, said during the conference.

Hyundai plans to raise vehicle prices in January and is weighing an earlier increase if commodity costs remain elevated. The company had expected prices to ease as the West Asia war subsided, but that relief has yet to materialise.

“The general expectation was that the war will stop and prices will come down. However, it has not happened. We are just watching it very closely. And sooner or later, if things remain the same, we will definitely have a price increase. In any case, in January, we will take the price increase. So we will see if there's a need to take a price increase before that,” Garg said in response to a question from the company.

Hyundai is the second carmaker after Maruti Suzuki to report a profit decline amid rising commodity costs despite revenue growth. Maruti Suzuki on Tuesday reported a 26% year-on-year drop in net profit to ₹2,466 crore in Q2FY27, hurt by higher commodity prices, rising logistics costs and investments to expand capacity.

Hyundai is targeting volume growth of around 8-10% in the second half, aiming to outpace industry growth. The company is also monitoring rural demand for signs of stress.

“We continue to see strong traction in the rural areas. That said, it is still early days. Let's see how things progress. But as of now, we believe rural areas will still outpace the urban growth going forward,” Garg said.

The rural outlook remains a potential risk. Both Maruti Suzuki and Bajaj Auto flagged signs of rural distress in their respective post-results media interactions, citing the impact of deficient monsoon rains due to the El Niño effect.

Ayaan Kartik is a Delhi-based journalist tracking the ever-growing world of automobiles and their components. With an experience of five years ranging from short-form news at Inshorts to longform journalism at Outlook Business magazine, he has dabbled into different storytelling formats. At Mint, he tries to regularly mix story styles, from longforms to crisp news stories. He has completed his graduation from Delhi University where he developed a liking for reading and writing about the world we live in today. Apart from automobiles, Ayaan likes to read up on geopolitics which has increasingly affected various sectors of the economy. Of all the promises journalism holds, he likes the fact that it allows a person to simply explain to readers about what is happening in the world. And what better sector than automobiles, which everyone since growing up has seen and felt connected to. Whether it is China's increasing grip on automobiles to growing affection for EVs in the country, Ayaan likes to connect his love for geopolitics and data to his stories as readers become more demanding on the types of stories they want.

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