Stock Drops as Investors React to Tax Demand and Lower Sales
Shares of Hyundai Motor India fell significantly on Monday, March 3, 2025, after the company received a ₹15 crore tax demand notice from GST authorities and reported a 3% decline in February 2025 sales.
The stock opened 1.5% lower and continued to decline throughout the day. By 12 PM, it was trading at ₹1,663.05 per share, reflecting a 3.86% drop on the National Stock Exchange (NSE). The company’s market capitalization at the end of the trading session stood at ₹1,37,156.94 crore.
This decline followed an official regulatory filing by Hyundai Motor India, confirming that the company had received a tax demand order from the Central GST Department, Tamil Nadu, related to financial years 2020-21 and 2021-22.
Hyundai Motor Receives ₹15 Crore GST Tax Notice
Hyundai Motor India was issued a tax demand order by the Additional Commissioner, Central GST Department, Tamil Nadu, on February 28, 2025. The demand was raised under:
- Section 73 of the Central Goods and Services Tax Act, 2017
- Tamil Nadu Goods and Services Tax Act, 2017
Tax Breakdown
- Total Tax Demand: ₹13.46 crore
- Penalty: ₹1.34 crore
- Applicable Interest: To be calculated separately
In response, Hyundai Motor India released a regulatory filing, stating:
“The company will be filing appeals before appellate authorities within the prescribed timelines. There is no impact on financial, operational, or other activities of the company due to this order.”
Despite Hyundai’s assurance that the tax notice would not affect its operations or financial performance, investor sentiment turned negative, leading to a nearly 4% decline in share price.
Hyundai Motor February 2025 Sales Decline by 3% Year-on-Year
Alongside the tax demand notice, Hyundai’s share price decline was also influenced by lower-than-expected sales figures for February 2025.
The company reported a 3% decline in total vehicle dispatches, with 58,727 units sold in February 2025, compared to 60,501 units in February 2024.
Breakdown of Hyundai Motor’s February 2025 Sales
- Domestic Sales: 47,727 units (5% decline compared to February 2024)
- Export Sales: 11,000 units (6.7% growth compared to February 2024)
While domestic sales fell by 5%, Hyundai’s exports increased by 6.7%, indicating steady demand in international markets. However, the drop in local sales raised concerns about consumer sentiment and market conditions in India.
CEO’s Statement on February 2025 Sales Decline
Commenting on the February sales performance, Hyundai Motor India Whole-time Director and CEO Tarun Garg remained optimistic about future growth.
“On the domestic sales front, despite geopolitical challenges, we remain optimistic that the proposed tax reforms in the Union Budget 2025 and improved liquidity will provide the much-needed demand boost to the market.”
He further stated that Hyundai will continue optimizing its exports, reinforcing India’s role as a key export hub for Hyundai Motor Company globally.
Why Did Hyundai Motor’s Stock Drop Almost 4%?
1. Tax Demand Notice Impact
- The ₹15 crore tax demand created short-term uncertainty for investors, leading to profit booking.
- Although Hyundai assured that its operations remain unaffected, investors reacted negatively to regulatory actions.
2. Lower Domestic Sales Figures
- A 5% drop in domestic dispatches raised concerns about slower demand and future revenue growth.
- Hyundai’s export growth of 6.7% was not sufficient to offset weaker domestic sales.
3. Broader Market Sentiment and Auto Sector Trends
- The Indian auto sector has been facing mixed trends, with some companies reporting growth while others struggle due to economic uncertainty.
- Investors are closely watching government policies related to taxation and incentives for the automobile industry.
Hyundai Motor’s Recent Stock Performance
Despite today’s decline, Hyundai Motor shares have been relatively stable over the past few months.
Hyundai Motor Stock Performance on March 3, 2025
- Opening Price: ₹1,711.65
- Intraday Low: ₹1,663.05 (-3.86%)
- Market Capitalization: ₹1,37,156.94 crore
Industry Trends and Hyundai’s Future Outlook
1. Auto Industry Sales Trends
- The Indian automobile sector has been experiencing supply chain disruptions and fluctuating demand due to global economic challenges.
- Passenger vehicle sales have been volatile, with some segments showing slower growth.
2. Union Budget 2025 and Auto Sector Taxation
- Hyundai’s CEO highlighted Union Budget 2025 tax reforms as a potential driver of demand recovery.
- If the government introduces tax incentives, it could boost consumer spending on automobiles.
3. Hyundai’s Global Expansion and Export Growth
- Hyundai India’s export business has shown steady growth, with a 6.7% year-on-year increase in February.
- The company plans to strengthen its global market presence, utilizing India as a major export hub.
Should Investors Buy, Hold, or Sell Hyundai Motor Stock?
Reasons to Buy
- Strong global market position, with growing exports.
- Union Budget 2025 tax reforms could boost domestic sales recovery.
- Financial stability despite the tax demand notice.
Risks to Consider
- Regulatory uncertainty due to the tax notice.
- Declining domestic sales could impact future earnings.
- Stock market volatility affecting the automobile sector.
Final Verdict
Investors should monitor upcoming earnings reports and government policies before making long-term investment decisions.
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