Hyundai Motor Company

Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Funtime 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishi Vohra from Kodak Securities. Thank you and over to you.

Thank you. Good evening and we welcome you all to the Q4 and FY25 earnings call of Hyundai Motors India Limited. Today we have with us Mr. Unsu Kim, Managing Director, Mr. Tarun Garg, Chief Operating Officer, Mr. Vangdu Hoor, Chief Financial Officer, Mr. Gopalakrishnan CS, Chief Manufacturing Officer, Mr. Sarvananti, Function Head Finance and Mr. K.S. Hariharan, Head of Investor Relations from Hyundai Motor India Limited. I would like to inform you that the call is being recorded and the audio call and the transcript will be available at the company's website. I would now like to invite Mr. K.S. Hariharan, Head of Investor Relations from Hyundai Motor India Limited. Over to you, Mr. Hari. Thank you, Rishi. Good evening, everyone and welcome to the Q4 Financial Year 25 earnings call. Before we begin, I want to remind you of the safe harbor. We may be making some forward listening 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 remarks on the performance and outlook, followed by a brief presentation by me on our fourth quarter and annual results for the financial year 25, after which we will be happy to receive your questions. Now, I hand over to our MD. Over to you, sir.

Thank you, Hari. Good evening and welcome to the fourth quarter and the financial year 2025 earnings conference call. In financial year 2025, Chememoral India scaled new heights, achieving remarkable milestones. During the year, the company successfully executed India's largest ever IPO, a historic achievement. FAB stands as a testament to Hyundai's legacy of excellence and its deep-rooted commitment to the Indian market, paving the way for the next chapter of HMIL's growth story. The company remains firmly committed to delivering sustained value and long-term returns to our shareholders. Within just six months of being received, the company secured inclusion in the Morgan Stanley Capital International Index. In the recent MSCI visit, which took place in February 2025, HMIL was the only large cap from India to be included in this global index. by becoming part of the prestigious Indian capital market indices such as Nifty, Next50, DSE500 and other indices in March 2025. We have 45 HMI hours of spending in the Indian stock exchanges, reinforcing its market presence and credibility. Financially, 2025 was a challenging and transformative year for the Indian automotive industry. The overall environment remained tough with a combination of macroeconomic uncertainties impacting consumer sentiment and the purchasing decision. On top of that, we were up against a high base from the previous years, which further amplified the impact. Despite these headwinds, HMIL mitigated the turbulence with agility with our quality of growth strategy solidifying its position further in India. Our first hire SUV lineup grew stronger driven by growing customer preferences and continued product enhancement. The launch of bold new Hyundai Alcazar and the introduction of cut electric Our first intentionally developed EV further strengthened our position in the segment. The fact that two out of every third vehicles sold by us in India is an SUV is a testament to our deep understanding of Indian customers and our commitment to delivering innovation, style and safety. HMIL further set industry benchmarks by surpassing the milestone of 2.5 million SUV sales and 1.5 million credit sales cumulatively since inception, including domestic and exports. The doubling of ADA's variant contribution and increasing popularity of sunroof equipment models reflects the rising aspiration of our customers and the success of our premiumization strategy. During the year, HMIL marked a significant milestone by completing 25 years of export from India, reaffirming its position as the country's largest exporter of passenger vehicles terminatively till date. The financial year of 2025 was marked by global uncertainties, including the Red Sea crisis in Middle East and the geopolitical instability in Latin America. Despite these headwinds, our agile and strategic decision-making enabled us to sustain export volume during the year. Turning to the margins, the market conditions were undeniably tough. Yet we were able to exceed the financial year 2025 on a strong note with an EBITDA of nearly 13%, clocking in another year of healthy margins. This was made possible through optimized operations, disciplined cost management, and a relentless focus on value creation. The company is in a pivotal phase backed by aggressive strategies and the lowest investment plan in India over the next few years, particularly focusing on scaling up production capacity, accelerating our presence in the Indian market and strengthening local manufacturing capabilities. The financial year 2026 will mark a significant milestone in our growth journey with the commencement of our third plant in Paligaon coming in after more than 15 years since the establishment of our second plant in Chiang Mai. The Pune plant is being developed as a modern manufacturing hub incorporating advanced global practices from our current company. Designed with flexibility in its core, The facility will be capable of producing both internal combustion engine and electric vehicles, enabling us to respond dynamically to market demand. Mirroring our Chennai plan's focus on sustainability, the Pune plan is also expected to integrate energy-efficient technologies aimed to reducing our carbon footprint. in alignment with Hyundai's global commitment to achieve carbon neutrality by 2045. We are gearing up to start the vehicle production in this new facility from the third quarter of financial year 2026. In parallel, while our dedicated localization team continues to enhance our localization efforts at Chennai plant, We also intend to deepen our localised supplier network by adapting our indigenisation strategy at the Pune plant, further reinforce our making India vision. With the increased capacity coming in from Pune plant, we will have additional heavy room for expansion in both domestic and export markets. The emerging markets have a significant demand potential and HMIL serves as a manufacturing hub for those markets. Aiming to become Hyundai's largest export hub outside South Korea, we aspire to continue our growth trajectory in export in the coming years. Aligned with our global vision of progress for humanity, Our desire to serve global customers with a wide range of smart mobility solutions will continue to grow stronger. Exports have gained strong momentum in the recent months, and we aim to sustain this trajectory going forward. We anticipate the growth in extra volume to be around 7-8%, supported by robust demand for our products in the emerging markets. The demand environment in domestic market continues to be challenging, but we remain optimistic in our strong fundamentals, which enables us to strategically pursue opportunities as can drive both growth and profitability. While the recent rate cut by RDI and income tax relief by government should support the demand sentiments, we remain cautiously optimistic on the backdrop of global trade and economic uncertainties. With the growing aspiration of customers, we believe SUV will continue to dominate the passenger vehicle segment and going forward. We will continue to focus on increasing our SUV contribution and premiumization. Our rural contribution has seen consistent growth and we are continuously strengthen our rural presence in high potential locations, both from sales and service perspective. We are set to accelerate our presence in the EV market, building on a strong foundation laid in the financial year 2025 with the launch of Crest Electric. This model has received an increasing response from the customers, leveraging the trusted legacy and the strong market presence over the credit ice model. For financial year 26, our endeavor is to grow broadly in line with industry, driven by our strong SUVization and premiumization strategy, along with a focus on rural markets, among others. While the near-term market sentiment appears subdued, we remain confident in the underlying potential of the industry and expect a rebound in the near future. HMIL is gearing up with aggressive product strategy coupled with capacity expansion while also extending its footprint across the country. We shall continue to march forward with a focus on customer delight, offering products that are future-ready, future-rich, and engineered for India. We remain steadfast in expanding well-branded portfolios across ice and eco-friendly technologies to cater to diverse customer needs across segments. In addition to ongoing products, interventions and updates, we are excited to announce that we will be launching 26 products. This will include a mix of new models, full model changes and product enhancements by the end of financial year 2030. This will comprise 20 from ICE and 6 from EV segment. Additionally, we shall be introducing new eco-friendly products like hybrids. These aggressive and strategic launch plans demonstrate our strong commitment to innovation, market responsiveness, and delivering sustained value to our customers. To conclude, we remain optimistic about the road ahead and are confident in our ability to strengthen our position in the market. With a sharp focus on quality-driven growth strategy, we are committed to delivering a sustainable performance, laying a strong foundation to regain momentum and reinforce our leadership in the industry. I am happy to share that the Board has recommended a dividend of 21 rupee per share for the financial year 2025, which translates to a payout ratio of 30%. We are also in the process of formulating dividend payout policy aimed at enhancing transparency and delivering consistent value to our shareholders. We look forward to sharing the details in the near future. Lastly, we are pleased to announce that HMIL will host its first investor day in September this year, covering near to long-term growth strategy, further details on upcoming product launches, and other key initiatives will be shared during the events. Thank you for listening.