Hyundai Motor India Limited (HYUNDAI) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Q3 and 9 months FY26 earnings conference call of Hyundai Motor India Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the conclusion of presentation and management remarks. I now hand the conference over to Mr. Amir Dargude from Ambit Capital. Thank you and over to you.

Thank you. Good afternoon. We welcome you all to the Q3 and 9 months FY26 earnings conference call of Hyundai Motor, India Limited. Today we have with us Mr. Thabangurk, Managing Director and Chief Executive Officer, Mr. Wang Doher, Chief Financial Officer, Mr. Gopalakrishnan, CS, Chief Manufacturing Officer, Mr. Sarwanan P., Function Head, Finance, and Mr. K.S. Hariaran, Head of Investor Relations,

Welcome to the earnings call for the third quarter and nine months, financial year 2526. Before we begin, I want to remind you of the safe hour. We may be making some forward-looking statements. That have to be understood in conjunction with the uncertainties and the risks that the company faces. The conference call will begin with our MD and CEO remarks on the performance and outlook, followed by a brief presentation by me on Q3 and 9 months performance, after which we will be happy to receive your questions. Now, I am handing over to our MD and CEO, Mr. Tarungarh. Over to you, sir.

Thank you, Hari. Good evening, everyone, and a very happy New Year to you all. I hope this year has begun on a positive note for all of us. Before I begin, I'd like to express my sincere gratitude to Hyundai Motor Company, as well as to all our shareholders for the trust and confidence they have placed in me by entrusting me with this responsibility of being the first Indian MDM CEO of Hyundai Motor India Limited. I'm both honored and energized to lead HMIL at this crucial juncture, and I look forward to building further on the strong legacy that my predecessors have left behind as we move ahead together. Reflecting on calendar year 2025, the Indian automobile industry benefited from a series of supportive policy measures by the Indian government that strengthened consumer demand sentiments. 2025 started with government announcing income tax cuts, which acted as a direct catalyst for discretionary consumption. Further, the implementation The implementation of GST 2.0 reforms brought greater clarity and stability to the indirect tax framework. This, coupled with interest rate cuts, significantly improved consumer buying sentiments and brought in a renewed wave of optimism. Importantly, structural shifts in consumer preferences continue to strengthen with increased adoption of SUVs, growing acceptance of new technologies, and a clear preference for higher value and feature-rich products. HMI achieved a significant milestone for our iconic midsize SUV Creta, which recorded its highest ever annual sales of 2 lakh units plus in a calendar year and reclaimed its position as the number one SUV sold in India. This milestone translates to an impressive average of 550 Creta hours being sold every day, reaffirming the model's undisputed leadership and enduring popularity in the Indian automotive market. Overall, 2025 provided a constructive and supportive backdrop for the auto industry, creating a strong foundation for sustainable growth. HMI also took a significant step forward by entering the commercial mobility space with the launch of the Prime Taxi Range. With the Hyundai's core sense of trust, reliability, comfort, and low cost of ownership, the initial customer response has been extremely solid. This reinforces our confidence in expanding our presence in this fast-growing and attractive segment. Moving on to domestic sales performance for the quarter, we delivered a healthy sequential volume growth of 5%, clearly reflecting a strong, festive-led demand and sustained momentum following the GST reforms. The quarter was further strengthened by the phenomenal response to the newly launched Andai venue. Customer interest has been overwhelming, translating into strong bookings of nearly 80,000 units, reinforcing our presence in the compact SUV segment. Rural markets continue to be a key growth driver for us. With sustained focus and targeted initiatives, we achieved our highest ever quarterly rural contribution to domestic sales, exceeding 24%. While our wholesale performance remained healthy, it was the underlying retail momentum that stood out in this quarter. Retail demand was particularly strong in December, delivering a robust 16% growth year on year. Importantly, with streamlined channel inventory, we have created adequate headroom for stronger wholesale volumes going forward in Q4 of this fiscal. Over the quarter gone by reflects strong demand momentum, excellent execution, and the sustained relevance of our business strategies. Exports. Exports continue to play a pivotal role in supporting our overall volume and profitability during the quarter. We delivered a robust year-on-year growth of 21%, driven by sustained demand momentum across key markets. Our major export regions, Middle East and Africa, and Latin America, recorded robust volume growth of 30% and 13% respectively. Looking ahead, we remain optimistic about the export outlook and see export as a meaningful growth engine, both in volume as well as profitability. We continue to deliver strong operating and financial performance across all matrices, including volumes, revenue, and profitability. We achieved healthy top-line growth of 8% in this quarter on a year-on-year basis. Our blended ASP this quarter improved by 5% year-on-year, reflecting our strong sales mix and prudent pricing strategy. Notably, the improvement in ASP was seen both in domestic and exports with a growth of 4% and 8% respectively. Further, we were able to maintain our ASP on QBases despite the seasonal nature of the quarter and competitive intensity with price wars prevailing in the industry. On the profitability front, we remain firmly committed to our quality of growth strategy. Despite costs associated with capacity stabilization and surge in commodity prices, we successfully maintained margins at levels comparable to last year without compromising on pricing discipline. Importantly, on a year-to-date basis, EBITDA margin expanded to 12.8% versus 12.5% last year. This was achieved through better sales mix and cost optimization measures, including our localization efforts. This underscores the resilience of our business and our ability to protect profitability while continuing to invest in long-term growth. Outlook. On the domestic front, we are well positioned to drive stronger wholesales in the coming quarters, With optimum dealer inventory levels driven by our disciplined approach and favourable GST tailwinds. The momentum is already evident with January recording highest ever monthly domestic sales registering a 9.5% year-on-year growth alongside highest ever total monthly sales including exports with a robust year-on-year growth of 11.5%. On an export front, while global uncertainties continue to evolve, our focus remains clear. By leveraging opportunities from the new venue and exploring new markets, we are confident of sustaining growth momentum in quarter four and beyond. Complementing the positive outlook on both the domestic and export fronts, our margin trajectory remains on track. As I traded during our investor day, we expect to close fiscal 26 within the guided EBITDA margin range of 11% to 14%. Our continued emphasis on operating efficiencies, disciplined cost management, coupled with our quality of growth strategy, gives us confidence in delivering healthy double-digit EBITDA margins even in the upcoming years. Before I conclude, I'd like to highlight the recent visit of our Executive Chair, Mr. Isen Jang, to India, during which he reaffirmed Hyundai's commitment to pursue a home brand strategy in India, anchored in the belief that India will be central to Hyundai's global growth journey. In line with this long-term vision and supported by our strong investment plans in India, we have committed to further strengthening our on-ground capabilities, deepening local relevance, and capturing the many opportunities that lie ahead. Thank you for your patient listening, and now I hand it back to Hari.

Thank you sir. During the quarter, we witnessed various business highlights as already mentioned by our MD and CEO in this opening remarks. Now, I will continue with our sales performance during the quarter. We achieved total sales of 1,95,436 vehicles in Q3 financial year 26 as compared to 1,86,408 vehicles in the corresponding quarter, reporting a growth of 4.8 percent In the domestic market, we sold 1,46,548 vehicles compared to 1,46,022 vehicles in the same quarter last year. Exports played a pivotal role in overall volumes during the quarter. Our exports grew by 21.1% year-on-year, driven by strong demand in emerging markets. Sequentially, domestic volumes grew by 5%, driven by the positive impact of GST reforms. Exports contribute a healthy mix of 25% to the overall volumes in Q3, financial year 26. Moving to the domestic volume mix for the quarter, SUV segment continued to witness strong momentum, led by the successful launch of the all-new venue. Hatchback volumes declined on a year-on-year basis, while sedan volumes saw an increase. On a sequential basis, all segments recorded growth, supported by GST-related tailwinds. Turning to the fuel mix, CNG continued to see strong traction, contributing 16% to domestic volumes, while diesel penetration was at 21% during the quarter. Now, coming to financial highlights for the quarter. Our revenue from operations stood at Rs. 179,735 million in Q3 financial year 26 as against Rs. 166,480 million in the corresponding quarter. EBITDA stood at Rs. 20,183 million as compared to Rs. 18,755 million in Q3 financial year 25. EBITDA margin was at 11.2% as compared to 11.3% in Q3 financial year 25. EBIT stood at Rs. 14,496 million for the quarter as against Rs. 13,482 million in Q3 financial year 25. EBIT margin was stable at 8.1%. Pat for the quarter was Rs 12,344 million as against Rs 11,607 million in the corresponding quarter, with a pat margin of 6.8% in Q3 financial year 26 as against 6.9% in Q3 financial year 25. We delivered healthy, here-on-air performance in both revenue and profitability, despite the impact of cost associated with capacity stabilization and surge in commodity prices. For the nine months of current financial year, revenue from operations stood at Rs. 518,472 million as against Rs. 512,526 million in the corresponding period. EBITDA stood at Rs. 66,325 million as compared to Rs. 64,211 million in 9 months financial year 25. EBITDA margin expanded to 12.8% as compared to 12.5% in 9 months financial year 25. EBIT stood at Rs. 50,181 million for 9 months, FY26, as against Rs. 48,462 million in 9 months, FY25. EBIT margin improved to 9.7% as compared to 9.5% in 9 months, FY25. Pat for the 9 months financial year 26 was Rs. 41,759 million as against Rs. 40,259 million in the corresponding period. We delivered a pat margin of 7.9% as against 7.8% in 9 months financial year 25. Year-on-year growth across parameters was mainly driven by better sales mix and cost control measures. Turning to profitability drivers for the quarter. Profitability was mainly impacted by increase in processing costs associated with capacity stabilization. On a sequential basis, profitability was further impacted by unfavorable mix and increased marketing spins during the quarter. However, on a year-on-year basis, through favorable export mix and prudent pricing, we were able to offset the impact and deliver profit growth during the quarter. For the nine months, financial year 26, increase in profitability on a year-on-year was driven by favorable product mix, export mix, and cost optimization efforts, which helped overcome many headwinds during the period. This concludes my presentation. Thank you all for your time and attention. Now, we open the floor for Q&A. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Chandramoholi Muthaya from Goldman Sachs. Please go ahead.

Hi, good evening, and thank you for taking my questions. I have three questions. The first one is just around the product mix. Suppose the GST cuts, you would have thought that the compact LCV segment should get a reasonably good fillip. There seems to be sort of relatively flattish trends on the XTERs this quarter. Versus on the Aura, there's been meaningful growth both in domestic as well as export markets. So just trying to understand the rationale behind that and what's driving Aura strength, but not so much extra strength yet in this environment. Second question is just around the comments you made around venue. So venue seems to be doing in the domestic market close to about 30,000 units a quarter, and you mentioned that you've got 80,000 bookings at this stage. And I'm assuming the venue is being manufactured in the new plant. So I just want to understand what the current quarterly manufacturing capacity is on the venue and how long it might take to potentially clear out this existing backlog on the venue of orders. And the last question is just around gross margin. So this quarter, we understand there's been a pickup in commodity costs. And in your case, I think there's roughly 130 basis points contraction in gross margin versus 2Q. So if you could just help us understand what part of that is because of raw material pressures, what part of that is because of export mix being lower, and what part of that could be because of the venue which might have been launched at an interoccupied price.

So I think the first two questions, like you said, the venue response has been fabulous. And as you know, Pune plant started operations on 1st of October. We launched the venue on the 4th of November. So last quarter was all about, you know, venue getting into the groove. And in January, you would have seen the venue recorded the highest ever numbers. So, answer to your question, 12,000, almost 400 units were done in venue, domestic, which tells you about the Pune plant's production levels. We are evaluating, you know, if we can further increase the production. So, that is being done because the response has been fabulous. On the Aura, again, a very, very good response is coming. And in fact, in January, 7,900 Aura has been sold. If you see, the average so far has been about 6,000. And suddenly, we are seeing that response coming to Aura. GST has a lot to do with it. Plus, also, as you know, on the 1st of January, we launched the prime taxi range. I think that is also helping the Aura numbers. So, going ahead, we believe that Aura will continue to do well, and we are looking for opportunities to see if we can further increase the Aura volumes. On the extra, you know, just one quarter of October to December wholesale numbers do not really justify. And let me give you a very, because you talked about Q2 versus Q3, and this is for everybody's benefit. I think we have to understand the underlying nature of seasonality of the Indian market. You know, this is, of course, my 33rd year in the industry. If you see October to December quarter is all about retails. It is not about wholesales. So if you see even at an industry level, just to give you numbers, retail for the TIV was almost 15.69 and wholesale was 12.98. Even for Hyundai, retail was 1.71 lakhs and wholesale was 1.46 lakhs. So when you see the profit and you try to see the sequential, I don't think it is doing justice. That is why year on year is very important, especially for this quarter, when all the expenses relating to sales promotion are on retails, whereas the profit is limited to the wholesales you do. And everybody tries to minimize their stock because it is very expensive to sell the 25 stock in 26. So we also did that. We had a great retails in December. And that is why we were able to make room and we were able to sell in January a very good wholesale at a very less, you know, promotion expenditure as well. So, I think this is inherent and that is why you have to be very careful when you are doing sequential profit analysis. Over to Hari for the other part of the question.

Hi, Chandru. Just to give some more clarity on the gross margin front, year on year actually our gross margin has improved. This was mainly supported by a favorable model and export mix and also to some extent the price increase which we did last year January. But sequential As Mr. Tarun has already explained, you know, broadly, this is more of a seasonal, you know, nature we need to consider, not just for domestic market, even for export market as well. Because even if you see sequentially the main reasons, one is the commodity inflation which we have been seeing in the recent times, and export volumes also have come down sequentially again due to seasonality. And to some extent I would say there is an unfavourable product mix also. So, all these things put together have actually impacted the gross margins on a sequential basis. Commodity of course, what we try to do, we try to absorb some of the cost pressure, but some cost we have, you know, increased as we have done the price increase in January 26, you know, and we will be continuously monitoring this commodity price trend, we will try to take all the cost optimization efforts, you know, to mitigate this impact on the margins

Thank you very much and all the best.

Thank you. We'll take our next question from the line of Gunjan Prithiani from Bank of America. Please go ahead.

Yeah, thanks for taking my question. Just continuing from the prior question, can you just give us a little bit more color on the margin bridge in terms of, you know, if you can specifically call out, you know, The impact of commodity headwind that you really saw in this quarter, what were the new plant startup costs? The reason I'm trying to just get a handle on these numbers is because the new plant startup cost is probably in the base now, and from here on, we'll start to see the revenue realization and venue ramp up as you sort of spoke about. So a little bit more color on MarginBridge in terms of commodity headwind, new plant startup cost, and discount.

Hi, Gunjan. Our commodity impact during the quarter was roughly 40 basis points. And then you asked about the new plan cost. So the overall processing cost impact, both on a sequential basis as well as year on year, roughly 60 to 70 basis points. And that is the impact. Discounts per se, actually, we have reduced the discounts sequentially. In Q2, our domestic discount was 3.2% on ASP. And now in Q3, we have already moderated to 2.6%.

Got it. And just on the plan, startup cost is 60 to 70 basis point that you all have absorbed in this quarter. Is it fully in the base or is there is more cost to go in the coming quarters?

See, overall if you see the plant we have started commencing this operation from October, as such currently we are seeing cost increase in labour, overage and depreciation, right. And if you look at all these costs, most of the costs are broadly in line with the guidance what we gave earlier, except that there might be some increase in depreciation as we ramp So, if we ramp up the capacity and the operations in the near future, there will be some increase in depreciation expected. So, broadly speaking, I would say roughly 100 basis points would be the impact from the from the Pune plant processing cost and which we expect should continue at least for a year

So, it is a 100 basis point of that 60-70 is already absorbed in this quarter that is the way to think through it right?

Yeah, yes, yes, yes. Because for depreciation, we expect some increase in the near future.

And just last clarification on margin, I think, is there anything to call out from a value launch cost which were bunched up in this quarter and may not record home into the next quarter? Any meaningful number to call out there?

Look, there are two issues here. One is, as you know, the launch cost. Obviously, we, as per our principles, you know, the entire launch cost is taken up in that quarter, so which we have done. At the same time, you must understand the model life cycle. Whenever a model is launched, obviously, it is launched at the lowest level of profit, and then it continues to grow, because we have then headroom to increase price, then we are, more localization also happens. So, I think we, so, this was the first quarter of the venue launch, and introductory price was there. Already, we took some action on the 1st of January by increasing prices. Going forward, we will see the opportunity ahead. So, I think we have to see from that perspective that, yes, not only advertising, but also from a pricing point of view, the opening or the introductory price is always the lowest. And this is not only for this venue, it has been there for all products across the industry.

This is very helpful. Now, just, you know, again, your thoughts on venue, because in your, you know, opening remarks, you did mention that venue will eventually start catering globally as well. Can you give us some color on what is the overall venue sales globally? And is it fair to assume that a lot of that now will start coming to India for production because the new venue has been launched first in India? So, some color on numbers, how big venue can really be outside of India as well?

Look, I mean, it's too early to say. Our principles have always been first establish the product in the domestic market and then look at the export markets. We have already started. The old venue was exported to 27 countries. The new venue, I think, Chile and other markets we are exploring, maybe 30. But it will take time, you know, so we need to be patient. And our first priority, of course, will be the domestic market, as we mentioned, because so many orders have come in. The waiting period is increasing, which we don't like. We want to really satisfy the customer. So, we are really focusing big time on the domestic market. And slowly, gradually, you will see that opportunities of the export market will also be taken. But this will be on the domestic market.

Got it. This last question, Daru, just trying to get your thoughts on this whole memory chip and RAM prices. I mean, they've just been a big talking point in the industry, given we do have a pretty high share of ADAS in our portfolio. So, is that something that we should worry about in terms of either the availability or the price going through the roof and affecting the supply chain? You know, some thoughts around that will help.

Gunjan, generally, if you look at it from a supply chain point of view, we have been quite aggressive here in terms of localization. Even if you see during this quarter, our localization level is already at 84% as compared to 82% on a year-on-year basis. Right. So, I think there are many components, many high technology paths. We are continuously working for, you know, localizing these components. So, I think with that, we feel that we can definitely manage the supply chain without any hindrance.

Good. Thank you so much. Thank you. We'll take our next question from the line of Kapil Singh from Nomura. Please go ahead.

Yeah, good evening, sir, and my best wishes for the CEO role that you have taken. May I know, sir, what would be the top three priorities for you now as we look ahead over the next few years?

That's a tough one. Okay, so as you know, in the investor day, Mr. Jose, our HMC CEO, had already laid down a very strong five-year plan for us to execute. That plan included, of course, a CAGR growth of more than 7% over the next five years, aiming for a market share of 15% plus, a 45,000 crore investment, 26 new products, hybrids, EVs, CNG, you know. So I think my job is, of course, to make sure that we execute it to perfection. The Pune plant has just started operations, how to stabilize the operations, how to make sure that we can leverage it. Then, of course, then phase two will come in, where the capacity will increase to 1.1 million. So I think we need to, because the model cycle is coming up, we have seen what only a new venue has done. So I know that the expectations are high. So, we need to prepare well. So, we need to really prepare well. And when I say prepare well, I need a preparation internally in terms of our employee capabilities, you know, grooming them for quality and excellence. We need preparation in the network in terms of dealers. We need preparation in terms of our customer satisfaction to take it to the next level, quality. Pune plant also gives us a lot of opportunity to maybe look at some of the good things. Not only good things carried over from the Chennai plant, but some of the good things which we learn in the Pune plant and then make sure that we imbibe them in the Chennai plant as well. So this is, I think, one of the main long-term issues, long-term priorities for me. The second thing in terms of short-term, of course, is that there are some opportunities which have come up because of the GST 2.0. How do we leverage these opportunities? How do I make the organization more flexible and more agile? We have already seen, you know, in January the kind of numbers we could get. And I think these days it is more about really collaborating and looking at these new opportunities, you know, which we can capitalize on. So I think as CEO, external as well as internal, I like to see how we make the vision of being a home brand in India, how we continue with our CSV activities, how can we really contribute meaningfully to the growth of the economy and the growth of the country, and of course, you know, lead Hyundai to be a smart mobility provider and look for really opportunities and continuously scan the environment for those new opportunities which can come in. Of course, one very big thing which we have is leveraging the power of the group. Like, for example, you would have heard from Mr. Jose that Hyundai Capital is coming in. How do we leverage those finance opportunities which will come up and the other opportunities as well? So, the legacy has already been set. This is our 30th year in India. Now, my job is to ensure that how the 30 years have been very successful, how in the next five years we prepare for the next 30 years so that they are even more successful and we lead Hyundai's second growth phase in India. I hope I answered your question, Kapil.

Yeah, thank you, sir. That's a great answer. Thank you so much. The second question I had was on growth outlook. You know, when we look at the next year, what kind of growth, just a range if you are expecting, and within that, you know, you had earlier predicted that compact SUVs as a category would probably benefit more, whereas, you know, some other expectations was that maybe hatches or entry segment cars could benefit more. So, I'm hoping you have some data now or ground feedback. So, as you look forward, you know, first of all, between the segments, you know, hatches, compact SUVs, large SUVs, how should we look at the growth over the next, let's say, two to three years? And overall, industry growth and for Hyundai, how to think about growth for next year? And is the Hyundai portfolio aligned to this growth outlook?

Absolutely. Absolutely. I think if you see, we had the Siam looking ahead conclave, where as an industry, the consensus was that next fiscal, 26-27, the growth could be 5% to 6% for the industry. We are well aligned to that as well. Answering your questions on the compact SUV, and just let me share with you some interesting data. So January to August 25, if you see hatches, hatch contribution was 22.4% to the overall industry. September to December, it reduced to 21.4%. This is a 1% reduction. And all this was taken by the compact SUVs. Because compact SUVs, January to August was 22.1% and September to December, it was 23.0%. So, and mind you, this was a time when venue was changing. So, we actually had, we lost some of the sales opportunity. Despite that, this is what has happened to the industry. So, very clearly, compact SUV with the venue now, you know, coming in full force, and of course, you know, more and more models coming up, more and more facelifts coming up, it seems that this will be a segment which will grow faster. Of course, the advantage of GST has been that all segments have started growing, you know. Earlier, the hatches were degrowing, but now hatches are growing, but compact SUVs are growing much faster. Even mid-SUVs, 12.8% contribution, it increased to 13.7% contribution for the TIEV, January to August 25, versus September to December 25. So you can see that the more growth is coming in SUVs and that is why overall SUV contribution has gone up from 54% in January to August 25 to 56.2% in September to December 25. So very clearly higher growth is coming in SUVs and we are well aligned to that. I cannot share with you all the models, but I think we gave you a very good flavor in terms of the 26 models, the segments, etc. And they are well aligned and we are well on our way to year-wise meeting those numbers which we had promised in terms of the models, you know, derivatives, facelifts, etc. And the powertrains which we had promised in the investor day. So we are well aligned to take care of this growth opportunity which seems to be coming our way. And taxi and other segments have really helped us. Like Aura sales, like I mentioned, 7,900 Aura sales, frankly speaking, would not have been imagined in the pre-GST era. So, this is one to do with taxi and second to do with GST. So, those opportunities also we are not going to miss and capitalize on. Thank you.

Thanks, sir.

Just lastly on the call. Kapil, I request you to join back the QBs as we have other participants' feedback for their turn. Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. The next question is from the line of Amin Pirani from JPMorgan. Please go ahead.

Yes, hi, and thanks for the opportunity. My first question was on royalty. Could you help us with what was the royalty rate for or the royalty number for the quarter?

I mean, the royalty was 2.8%.

2.8%. Okay, thank you. Secondly, for you, Mr. Tarun, you talked about the taxi growth, and obviously, this is a category which has been growing, and you are one of the two players which are doing quite well. I just wanted to understand for our sense, does it matter from a profitability or margin point of view if you sell a vehicle in the personal segment or in the taxi segment?

Look, I cannot give you the details, but I will say there's not much of a difference. It's not much of a difference.

Okay. So this is also a profitable business segment, even if it starts to grow.

It is a profitable business. It is a profitable segment. Okay. Okay, okay.

And lastly, you know, obviously, in the investor day, you had laid out, you know, a year-wise as well as, you know, a product launch pipeline till 2030. Now, in fiscal year 27, obviously, you know, as per that presentation, we are expecting one new nameplate at least. And maybe it's early days, but any broad sense as to the timing, like would it come before festive or would it come towards the end of the year? Any broad timeline if you can help us with?

No, I mean, we stick to the investor day. And like I said, we are fully committed to meeting all those promises. That I can assure you. We are fully on track for that. Beyond that, I would not like to give any further guidance.

Sure. No problem, sir. All the best, and I'll come back in the queue.

Thank you.

Thank you. Next question is from the line of Dini Singh from Morgan Stanley. Please go ahead.

Hi, team. Thanks for the opportunity. My first question is on capacity utilization. You know, Hyundai has always had very high utilization rate of capacity. Now, obviously, it has come off with a new plant coming up. How do you see that? Like, how do you see, when do you see Hyundai going back to that 90% kind of utilization rate? Because I assume as you hit there, a lot of the costs that we've talked about will get absorbed by then.

When I see if you look at now the Pune plant we have started in October. Already we are having we are running two shift operations and we are having more than 90% utilization rate. Of course, Chennai capacity utilization has come down a bit because we have shifted the venue to this new plant. See, the thing is that, one is the existing models, we are continuously working to improve the volumes. Already January numbers we have discussed. So, this will be a continuous process. Second thing, when the new models start filling our product portfolio, I think that should also strongly support us, you know, to improve the capacity utilization at a healthy level.

Thanks for that, Hari. Then, you know, the point that you made, 100 pieces point of it coming from the Plune plant ramp up and just remaining there for a year, is that also linked to that, that in a way you guys are saying that in a year, in the next one year, new models will come up, so utilization rate will go up? Is that why you said one year time frame for that cost to continue?

No, see, whatever is the margin impact which I mentioned is basically to do with the overall operating leverage, how we can recover the fixed cost impact from the Pune plant, and also because Chennai capacity utilization is also down now, so there also my processing cost is actually increased, right? Right. So together, if you if you have to see in total, for me to recover the total cost, whatever I'm incurring from this new facility, I need to increase my volumes both in Chennai. Of course, Pune is doing well already with venue. And that is not a major challenge for me. But mainly for Chennai, if you look at, you know, my existing models will start giving me additional volumes with all my efforts we are making, including the taxi segment as well. Plus, of course, the new models, once it starts coming, we have not announced the new models, where it will come, Shenayah or Pune. But hopefully, these new models, wherever it comes, it will support me at a total level.

And this 100 basis point hit lasting for a year, does it also include the second ramp up in Pune plant for you to go up to 1.1 million? Because that will also be another layer of cost increase, right? So, does this include that, that you guys, in your calculation of, you know, incremental volume versus cost, you sort of believe this sort of balances it out?

No, as of now, the figure indicated it is mainly for the phase 1 capacity only. Phase 2 still, we are some time away. So, I think we can discuss that a little later only. But generally, at a broader level, again, if you understand, normally for the initial capacity expansion generally calls for huge CapEx investments, right? But the second phase ideally shouldn't incur that much of a CapEx is a broader understanding. But anyway, as I mentioned, we are still some time away. We will come to know the details, you know, in due course of time.

And any timeline on phase two? When are we planning to ramp that up?

Twenty-eight.

FY 28.

Twenty-eight.

Okay, calendar. Calendar 28.

Calendar 28.

And lastly, Dean, just on Mexico, it is an important market for us. We know about the tariff increase. If you could talk a little bit about interplay of price increase, demand, post the tariff hike. How has that played out? That's it. Thank you.

Bini, if you see, export has been pretty good for us. In the recent times, especially for the last one year or so, even during this year beginning, we gave a guidance of 7 to 8% growth for this fiscal year, but already we are at 18% growth for the nine months period. The momentum is pretty strong. I think for the emerging markets, wherever we are supplying, we are continuously seeing a strong demand for the product. So, the growth momentum should continue is what we understand. See, all these tariff issues, If you take Mexico or even South Africa, there is some news, right? So all these things we are evaluating. But if you see our broader strategy, what we are trying to do is we are continuously exploring opportunities in new markets in order to overall de-risk our export operations. This is a broader strategy. I think that should definitely help us on the export front.

Great. Thanks, team. Best wishes for future quarter.

Next question is from the line of Pramod Kumar from UBS Securities. Please go ahead.

Yeah, thanks a lot for the opportunity.

Can you use your handset mode, please, Pramod? Your audio is not very clear.

Is it better now?

Yes, please go ahead.

Yeah, can you hear me now? Yes, please go ahead. Yeah, thank you.

This is for Pramod, sir.

I wanted to understand your thoughts on Greta, Because that's a key model for us, a big property center. And given when costs are rising up for us, and we're going to be operating a new plant under low utilization, then costs are going to be higher. And the fact that the segment is in intense competition with multiple launches. So we just want to understand your thoughts between now and when the new Creta comes in. How much is your confidence on sustaining Creta without any discounts? Because that model has been a standout since launches has not been on discount, which is a record in itself. But just want to understand, for the next few quarters, until you get a new model, what is your strategy going to be to keep it away from discounts?

I've been answering this question now for three years. Because whenever a new competition comes in, everybody asks what's happened to Creta. We already shared, Hari already shared that last year was the best ever for Creta, 200,000 plus units. Number one SUV. January, where all the new models, so-called new models have been launched, again close to 18,000 numbers. Look, I cannot predict the future. But what I can tell you is that we have been able to manage Creta because we never sit, you know, like this. We always create, like for example, we had the night edition. It has received some great response. So we keep on making small changes. We keep on creating the excitement for the customer. Now, Creta has always been on waiting period, you know. So I think this was a great opportunity last three, four, five months. In the rural areas, we have started a major thrust on Creta. So we don't want to get into discount mode or something. I think Creta has a very strong brand. And as long as we can utilize and leverage the huge brand equity, the network, the customers, so many customers who take Creta to Creta, I think we are fairly confident for the Creta numbers. But if you want that quarter by quarter, how many craters I will sell, I think it is very, very difficult for me to, but we also understand that it is very important, and like we have been doing over the past so many years with all the competition coming in, we will continue to do those efforts as well as more to sustain the crater numbers.

Thank you. No, I was talking more about keeping it away from discounting, sir, and sustaining this record what you have built with the brand till the new credit comes in. My focus was more on that.

On discounts, I can tell you feature guidance on discounts is very difficult to give, but whatever steps we are doing helps us to really prevent us from really going into discounts and all. I think the network leverage and brand equity is very strong, and we want to leverage on that. Another thing I want to tell you is now ICC Cricket is happening, T20. Now, CRETA is the key model there. You will see across the stadiums, CRETA being displayed, you know, already in the showrooms, you can see the material being sent and the contest around the CRETA, you know, our own dealer teams, customers. So, I think we are doing various steps to ensure that CRETA remains the flag bearer for Hyundai, both in terms of volume and profit.

Okay, thanks a lot for that. And second question is on the export outlook, sir, because you talked about the next year's industry growth number, what you're looking at as FIAM and as a company. But any thoughts on the export market in terms of what the growth could look like there for FI27?

Pramod, we have, maybe for FI27, we have not yet given the guidance. Maybe we'll give it in some time. But FI26, as I already mentioned, it is pretty solid. The numbers we have seen, and even in Q4, we expect this momentum should continue.

Okay. Fair enough. Thanks a lot. Pleasure of luck.

Thank you. Next question is from Raghunathan ML from Nuwama. Please go ahead.

Thank you very much, sir, and congratulations on the strong response of renew. Thank you. Sir, my first question was on the commodity inflation part. Can you indicate that what is the kind of increase expected in Q4, and based on that, how much has been the blended price hike, and what are the under-recoveries? And also, if you can talk about, you know, whether you hedge your commodities, what is the policy there?

Raghu, Hari here. Commodity, as I already called out, in Q3, the impact was roughly 40 basis points, the margins. And Q4, see, what we are seeing is, we are seeing continuous volatility in some of the commodities, especially the precious metals, right? I think one day it is decreasing, one day we are seeing some increase. So we are continuously monitoring the price trends. We don't do hedging, but generally we try to manage this commodity exposure through other strategies like we have some long-term supplier contracts. We engage in diversified sourcing strategies. So these are all some of the measures we take to manage this commodity impact. And we also try to reduce the impact as much as possible through the other efforts. Like, for example, the cost optimization efforts which we discussed, like localization, value engineering. These efforts continue to help us in terms of cost optimization. As far as price increase is concerned, as I already mentioned, we have already announced the price increase we've implemented in January. That was nearly 60 basis points we have done the price increase. That was largely for venue. So, going forward, we will, as I mentioned, we will continuously monitor the price trends on the commodity front, and we will take the necessary actions.

Thank you, Hari. Can you also indicate how much was the labor code impact in employee cost this quarter?

Raghu, if you see, we have also disclosed in the financials as well. What we have done is in the last few years, we have proactively changed our policies and compensation structures to a larger extent, which is more or less aligned with the emerging labor code requirements. So, whatever was the financial impact, we have already recognized in the financials then and there. So, today, if you look at, based on the latest guidance, we have assessed this impact, which came out to be very, very minimal, and we have reflected in the Q3 financials as well. Going forward, we will anyway look at the final rules from the state and central rules in this regard. If at all, any additional impact will come, we will also recognize in the books of accounts.

Understood. And can you also share that, you know, at the end of Q3, given that the channel inventory had gone down, how much would have been the inventory days in the channel? That is, the end of December?

So, end of December, the inventory was two to three weeks. So, even now, inventory is less than four weeks. So, we had a very good retails in January. Normally, at the end of January, inventory goes up to five weeks, but we are working on less than four weeks inventory. So, these are good signs for the future, but we have to see how the momentum continues going forward.

Yeah. Got it so much, sir. Thank you. Thank you so much.

Thank you. Next question is from the line of Mukesh Sara from Avendis Park. Please go ahead.

Yeah, good evening, and thank you for the opportunity. My first question is with regards to the industry. I think last quarter you mentioned that there is a lot of upgrades that's happening, Even, say, within the model, the higher-end variants are seeing a lot of demand. So now that it's been about 3-4 months since the GST cut, if you could give some sense on how this has played out, maybe for you, in terms of variant mix, have you kind of seen any material shift there within, say, a model?

I already gave this thing about how SUVs and all. Now on the variant level, it is very difficult. ASP trends already, Hari has given that on a year-on-year basis, how ASP moved up by 5% or so. We gave you domestic as well as export separately as well. Beyond that, it is very difficult to give you how variants are moving.

But nothing material to call out, so basically nothing material as such to call out over the last, say, quarter on quarter. Nothing as of now.

Yeah, nothing as of now. Yeah, yeah.

Got it, got it. And I think one of the answers you had mentioned about the industry growth of 5-6% expected in F27. Any additional color you can provide with respect to what growth is hatchback expected within this 5-6%?

Very difficult, you know, things are very changing. I think if we want a higher growth, first thing we need to do is not to set a target, you know, we have to be flexible. And I think when we are flexible, we will definitely end up with higher numbers. So let's see how things progress. And I think all of us are gearing up for that, you know. So right now, very difficult to say how much will we hatch, how much will we, yeah.

Okay. And just lastly, any update on the CAFE 3 norms that we have had, say, on discussions with the ministry, etc.?

No, we are also waiting. We are also waiting for the final norms to come up. No additional update after the draft. Yeah. Thank you.

All right. All right. Thank you so much.

We'll take our next question from the line of Yash Agarwal from Nirmal Bank Securities. Please go ahead.

Thank you for the opportunity. I just wanted to know, like in the domestic portfolio, SUV mix is around 70% while in export, it's on the lower side. Is there a trend where we are seeing the SUV penetration increasing in the export portfolio as well?

I think this is an opportunity very well pointed out by you. We already mentioned that the new venue, the new venue, India will be the sole supplier of new venue going forward also. So this is an opportunity. Then extra right now, we don't have RSD going forward. You know, we will look at the LSD option. Sorry, we don't have LSD going forward. We'll look at the LSD option. So I think you will see that the mix shifting in favor of SUV is also going forward. We are looking at some of the opportunities in Alcazar as well. So, let's see how things progress, but you are right, as of now, the focus has been on the Sedan, Varna, and the Aura, and of course, the hatch like Neos, but I think now we are seeing green shoots in the SUVs, which we like to definitely leverage with the Venue and the Xter especially, and of course, with the other models as well. And also, the new models that we are going to come, of course, mostly will be SUVs. So, we will look at all those opportunities also, you know, wherever we can do for exports.

And the second question is on the India-EU FTA deal, which is paid reduction in the import duties. How will it impact our genesis plan for portfolio expansion in India?

Yeah, India FTA is only five days old and still we have to get all the details, etc. I think it's too early to, I think we still have to get the details of the FTA, and we are, as far as Genesis is concerned, it's a very strong brand globally, and we are very confident and will be very well prepared, you know, to, as and when we launch the Genesis. But I think it's too early to comment on how will the FTA affect the Genesis. Both are very, very hypothetical. So please bear with us. At the right time, we'll announce our Genesis strategy and the future plan as well. Thank you.

Thank you, sir, and all the best for this.

Thank you.

Next question is from Jinesh Gandhi from Oakland Capital. Please go ahead.

Yeah, hi. Am I audible?

Yes, please go ahead.

Hello. Yeah, hi. Mr. Gurd, my question is again on the EU FTA. Given that Europe is one of the important markets which is getting currently sold from Indonesia for products like Greta, Do you think there is a case to be made of, you know, duties on exports of cars from India to EU reduces to zero? Is there a case for India to eventually be production hub for Europe for some of these models which are made in India?

Look, we are awaiting the details. Pima Fesi, it appears to be an opportunity. But until we get, you know, the details of what is there, I mean, it's very difficult to comment. So let's please bear with us. And as and when we get more details, we will talk about our strategy. We've already mentioned that we have a very strong protection ecosystem in India, and we would like to really increase the exports from India going ahead as well. Eventually, by 2030, we have to take the export penetration contribution to 30%. So I think all these FTAs are presenting new opportunities, but we still have to study in detail, you know, because what it means, what kind of changes will have to be done. In our product, what kind of regulations are going to be there, whether it's going to be, like for example, currently FTA mentions that maybe EVs will not be apart in the first few years. So I think all those details will have to be seen and what are the opportunities, but we will definitely like to utilize those opportunities to export vehicles to Europe as well from India. But it is too early to comment on that at this stage. Thank you. Sure.

Any sense of what would be the total exposure to date from India? How much would we be going to Europe currently?

No, nothing, nothing. We are not exporting to Europe. We are the hub for the emerging markets, Middle East, Africa, Latin America, Asia, etc. We are not exporting to Europe currently.

Great. Thanks and all the best.

Thank you. Ladies and gentlemen, that was the last question for today. With this, we conclude today's conference call. On behalf of Hyundai Motor India Limited, we thank you for joining us and even our disconnection lines.