Hyundai Motor India Ltd (NSE: HYUNDAI) Q4 2026 Earnings Call dated May. 08, 2026
Corporate Participants:
K.S. Hariharan — Head of Investor Relations
Tarun Garg — Managing Director and Chief Executive Officer
Analysts:
Chirag Jain — Analyst
Kapil Singh — Analyst
Binay Singh — Analyst
Raghunandhan NL — Analyst
Chandramouli Muthiah — Analyst
Gunjan Prithyani — Analyst
Amyn Pirani — Analyst
Arvind Sharma — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q4 and 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 presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Chirag Jain from MK Global Financial Services.
Thank you. And over to you.
Chirag Jain — Analyst
Thank you. Good afternoon and we welcome you all to the Q4 and FY26 earnings conference call of Hyundai Motor India Limited. Today we have with us Mr. Tarun Garg, Managing Director and Chief Executive Officer, Mr. Wangru, her Chief Financial Officer, Mr. Gopalakrishnan, CES Chief Manufacturing Officer, Mr. Saravanan T Function Head Finance and Mr. K.S. Hariyaran, Head of Investor Relations from Hyundai Motor India Limited. I would like to inform you that the call has been recorded. I would now like to invite Mr.
K.S. Hariran, head of investor relations from Hyundai Motor India Limited over to you, Hari.
K.S. Hariharan — Head of Investor Relations
Thank you, Chirag. Good evening everyone. Welcome to the Q4 and financial year 26 earnings conference call. Before we begin, I want to remind you of the safe harbor we may be making. Some forward looking statements that have to be understood in conjunction with the uncertainties and the risk that the company faces. The conference call will begin with our MD and CEO remarks on the overall business in financial year 26, an outlook for financial year 27 followed by a brief presentation by me on Q4 and financial year 26 performance.
After which we will be happy to receive your questions. Now I hand over to our MD and CEO Mr. Tarungar. Over to you sir.
Tarun Garg — Managing Director and Chief Executive Officer
Thank you, Hari. And good evening everyone. As we complete our 30th year of operations in India, it feels like a moment to pause and reflect on the journey. One that has been shared by resilience, adaptability and a relentless pursuit of opportunities. Over the years, we have consistently embraced evolving market dynamics and transformed challenges into avenues for growth. For us, this 30 year milestone is not just a corporate achievement. It is a shared story of trust, pride and progress. 30 years strong and the bond between Hyundai and its customers is only getting deeper.
In fiscal 26, we have further strengthened this legacy by laying a solid foundation for our next phase of progression. Underpinned by the commencement of our third manufacturing facility and pipeline of robust product launches. Together, these strategic initiatives position us strongly to usher in the next era of Hyundai’s growth in India. As you know, fiscal 26 marked a year of two distinct phases for the Indian automobile industry driven by a shift in policy and demand dynamics. The first half remained largely underwhelming, primarily due to muted customer sentiments.
However, the landscape shifted meaningfully in the second half following the GST rate rationalization in September, which acted as a strong catalyst for recovery. This shift coincided well with the commissioning of our new plant and product launch cycle kicking in. Together, these created strong leverage and allowed us to respond to the improving demand environment, supporting a steady acceleration in growth in the latter half of the year. Further, this sustained momentum culminated in a strong quarter four fiscal 26 with our domestic volumes witnessing a growth of 8.5% on a year on year basis, marking our highest ever quarterly domestic sales since inception.
This growth was complemented by our agile product intervention across segments. The refresh launch of Exter and Verna are poised to further accelerate volume momentum in the coming quarters. The all new venue continues to be a strong growth driver, receiving an overwhelming customer response while consistently scaling up volumes since its launch. This has further reinforced our strong position in the compact SUV segment. Also, we are extremely proud that the all new venue has secured 5 star safety rating under Bharat and cab testing.
We believe this shall strongly support the positive momentum going ahead. Our business performance was also bolstered by impactful marketing initiatives. In this context, Hyundai’s partnership with ICC marked a significant step which enhanced customer centricity by driving deeper engagement leading to greater visibility. On the regulatory front, we have fully met Cafe requirements for fiscal 26 for CAFE 3 based on the recent draft, we have calculated the requirements and we remain fully confident of meeting the compliance backed by our strong powertrain strategy.
Beyond regulatory compliance, our focus extends to building sustainable and responsible business. ESG principles are embedded across our operations supported by robust frameworks as a key milestone in this journey. During the fiscal year we have achieved Re100 across facilities, reinforcing our commitment to clean energy adoption on exports. Despite the ongoing geopolitical headwinds, our volumes grew by 9.4% year on year in quarter four for full year, our export performance witnessed strong volume growth driven by robust demand for our products across emerging markets and our continued focus on expanding into new geographies.
This enabled us to register a growth of 16.4%, significantly outperforming initial guidance of 7 to 8%. Our overall volumes during the year registered a growth of 1.7% with a healthy balance between domestic and exports. Moving on to financial performance, we delivered a top line growth of 5% on both year on year and quarter on quarter basis. In quarter four, fiscal 26 led by well better volumes and prudent pricing actions. On the profitability front, the ongoing commodity pressures along with seasonality in exports business have impacted the margins on sequential basis.
That said, we were able to partly offset these through calibrated price increases along with continued focus on cost control efforts. In line with our margin guidance of 11 to 14%, we concluded fiscal 26 with a strong EBITDA margin of 12.2% reflecting solid execution despite costs associated with capacity addition and commodity price pressures. This resilient performance was supported by robust volume growth in exports, calibrated pricing strategy in domestic market and our proactive cost reduction efforts.
Moving on to fiscal 27, we have begun the new financial year with a solid performance in April with domestic volumes registering growth of 17% year on year. As we move forward, we are well positioned to capitalize on the supportive demand environment while strategically unlocking the incremental opportunities arising from upcoming product launches. We feel very excited to inform you that during this financial year we shall be introducing two completely new nameplates which have been keenly awaited by all of you.
Both these launches are expected to meaningfully boost our volumes and act as powerful catalyst for our next phase of growth. Of these two new launches, one will mark the debut of our new localized dedicated EV in the compact SUV space, accelerating our transition towards electrification and strengthening our future ready portfolio. The other one will further expand our presence in the ICE SUV segment. Notably, both these launches are positioned in high demand segments aimed at broadening our portfolio and deepening our presence.
The upcoming EV will mark our entry into a new segment, while the ICE SUV will further reinforce our position in the Mid SUV category. When I say mid SUV, I mean more than 4 meters. Backed by these product actions and other initiatives, we remain confident of delivering domestic volume growth of 8 to 10% in fiscal 27. Having said that, our enhanced plant capacity and flexible operations position us to swiftly respond to any further growth opportunities even beyond 8 to 10% should they arise during the year on exports.
While the current macro environment is uncertain, the demand for our products remains intact across key markets, providing us confidence to recover export volumes as the market conditions improve. Even in an extremely uncertain environment, we are determined to go the extra mile and deliver volume growth of 8 to 10% in exports as well. In fiscal 2017, we will be continuously strengthening our export resilience through market diversification and product launch actions. In quarter four, fiscal 26, we commenced exports of new venue and we will continue to expand into newer geographies further solidifying our presence.
HMIL will in fact serve as the global manufacturer for the new venue for hmc. We will be launching Varna PE and Exter P in the export markets as well. Further, the volumes will be strengthened by introduction of Exter LHD in the LSD markets. Also, the two new nameplates which we indicated are not only planned for the domestic market but will be considered for export markets as well. In due course, our growth ambition plans will be fueled by aggressive investments of approximately 7,500 crore in fiscal 27, marking the highest ever capex in recent years.
On margin front, despite the near term headwinds including the inflationary pressures and geopolitical uncertainties, our endeavor would be to deliver margins within the guided range. We will be taking calibrated actions to support margins going forward as the upcoming two new models will be manufactured at our Chennai plant. It will bring back utilization to healthy levels in Chennai and of course we are continuously evaluating ways to increase production of venue in Pune. Goes without saying that we’ll continue to focus on proactive cost optimization measures including localization and value engineering efforts.
In many ways we see fiscal 27 as a year of building strong momentum as we are gearing up with a lot of intent and energy. As we complete 30 years of operations in India and enter the next phase of growth. We do so with strong conviction and a well defined growth agenda committed to capturing the opportunities ahead. As you know, we already announced our capacity expansion plans of reaching 250,000 units in Pune by calendar 28. Now I am pleased to announce that following the completion of phase two expansion in calendar 28, we will undertake further capacity expansion of 70,000 units at the Pune plant to support our future growth aspirations.
This will take our total capacity in Pune to about 320,000 units and overall capacity to more than 1.1 billion units by 2030. In order to be future ready, we are also leveraging AI across our operations and we have a clear AI roadmap in place aimed at unlocking opportunities across manufacturing efficiency, quality enhancement, supply chain optimization and enhanced customer experience among others. Finally, we feel confident that Hyundai will continue to be part of lives for the next 30 years and beyond, embracing a future that is greener, smarter and more inspiring.
I’m happy to share that the Board of Directors have recommended a dividend of rupees 21 per share for fiscal 26, which translates to a payout ratio of 31.4% on the consolidated profit. Thank you for your patient listening and now I hand it back to Hari.
K.S. Hariharan — Head of Investor Relations
Thank you sir. Starting with the highlights, this quarter clearly reflects how we are steering HMIL into the next phase of growth while simultaneously scaling our reach and deepening market presence. During the quarter we have enhanced our existing models Verna and Extra by reigniting the design, technology, safety and comfort which resonates well with today’s young Indians. The new venue continues to garner new milestones and recognitions. Recently it has been crowned the Compact SUV of the Year by autocar.
All these demonstrate our consistent focus on agile product execution which aligns well with the evolving market needs, our efforts to scale reach while growing deeper or yielding tangible results. We achieved an all time high rural penetration underpinned by our strong product offerings and on ground efforts to strategically enhance our network reach. Our CNG penetration which was 13% in Q4 financial year 25 has been steadily growing, now reaching 18% in Q4 financial year 26. Aura recorded its highest ever quarterly sales in Q4 financial year 26.
Notably the sales of this model were the highest on full year as well. Creta continues its reign as a segment leader led by strategic product enhancements in line with evolving consumer needs. Moving on to our sales performance during the quarter, we achieved total sales of 2,8275 vehicles in Q4 financial year 26 compared to 1,91,650 vehicles in the corresponding quarter, reporting a healthy 8.7% year on year growth. In the domestic market we sold 1 66,578 vehicles compared to 1 53,550 vehicles in the same quarter last year, a growth of 8.5%.
On exports, we had an incredible year with a strong performance across all quarters. Though Q4 was impacted by geopolitical disruptions, we were still able to deliver a growth of 9.4% for this quarter on year on year basis. This performance reflects our export resilience supported by diversified market presence and operational flexibility. On full year basis, our overall volumes grew by 1.7%, majorly supported by strong export growth of 16.4% for the year and rebound in domestic volumes in H2. With respect to domestic segment mix, SUVs continued to be the major contributor to our volumes.
Notably hatches and sedans showed growth during the quarter aided by GST benefits and our product actions. Talking about the fuel mix, a clear shift is visible away from traditional fuel options towards more eco friendly powertrains and our multi powertrain strategy positions us well to capture diverse needs of the market now coming to financial performance for the quarter, our revenue from Operations stood at Rs. 1.89,162 million in Q4 financial year 26 as against rupees 1.79,403 million in the corresponding quarter.
Revenue grew by 5.4% year on year due to better volumes and prudent pricing actions. EBITDA stood at rupees nineteen thousand six hundred sixty million as compared to rupees twenty five thousand three hundred twenty seven million in Q4 financial year twenty five EBITDA margin stood at 10.4% as compared to 14.1% in Q4 financial year twenty five ebit stood at rupees thirteen thousand eight hundred twenty four million for the quarter as against rupees twenty thousand twenty three million in Q4 financial year twenty Five EBIT margin stood at 7.3%.
PAT for the quarter was rupees twelve thousand five hundred fifty six million as against rupees sixteen thousand one hundred forty three million in the corresponding quarter. We delivered a pat margin of 6.5%. Let me now explain the reasons for the margin movement on year on year comparison. If you See PBT for Q4 Financial Year 26 reflects elevated commodity prices, cost associated with capacity addition and unfavorable product mix. Though volumes were better, the cost pressures outweighed the benefits leading to a decline in margins on year on year basis.
On sequential basis, better volumes, calibrated pricing actions and higher government incentives helped partially offset the impact of commodities and unfavorable sales mix during the quarter on full year basis, revenue from Operations stood at Rupees 7. 7633 million in financial year 26 as against Rupees 6. 91929 million in the corresponding period. EBITDA stood at Rupees 85985 million as compared to Rupees 89538 million in financial year 2025 EBITDA margin was at 12.2%, well within the guided range.
EBIT stood at Rupees 64005 million for financial year 26 as against Rupees 68485 million in financial year 25 EBIT margin was at 9% as compared to 9.9% in financial year 25. PAT for financial year 26 was Rupees 54315 million as against Rupees 56402 million in the corresponding period. We delivered a pat margin of 7.6% as against 8.1% in financial year 25. While H1 was very strong for us, the margin softened in H2 due to combination of factors such as cost associated with capacity, addition and elevated commodity prices.
Coming to the outlook as Highlighted by our MD and CEO, we are entering financial year 27 with a strong conviction and clear strategic direction to translate the momentum into sustainable and measurable growth. We believe we are well positioned to strengthen, scale, enhance competitiveness and drive the next phase of growth. This concludes my presentation. Thank you all for your time and attention. Now we open the floor for Q and A. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone 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 and to restrict to two questions at a time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Take our first question from the line of Kapil Singh from Nomura.
Please go ahead.
Kapil Singh
Yeah, hi. Good evening, sir and thank you so much for your opening remarks which are very helpful. Yeah, good to hear such energetic commentary given the tough conditions. Sir, my question is just follow up on the guidance we have given. So firstly on the margin side, if we can articulate, we are currently at about 10 and a half percent margins and we are guiding for a range of 11 to 14%. There seems to be further commodity pressure. So what are the margin levers we are thinking of from here? That and also in the current quarter, how much commodity pressure did we face?
And when we look at next quarter, what is the commodity pressure and how much is the pricing action that we have taken?
Operator
Your line please. There’s some background disturbance on your line. Thank you.
K.S. Hariharan
Yes, sir.
Kapil Singh
Should I repeat the question?
K.S. Hariharan
No, no, it’s fine. I got the question. If you see, first of all, on commodity, as you asked, last quarter, the impact on margins was roughly 120 basis points. If you compare on a sequential basis, and I would say that out of this 120 basis points, roughly 50 to 60 points would be kind of a one off which might not recur in the upcoming quarters. And in terms of price increase, again, as you know that already, we did a price increase in January to the tune of 60 basis points followed by a selective price increase for venue in the month of March.
And we will be doing one more price increase in May as well. Right. In terms of the overall margin outlook, see if you understand the Q4 profitability. Of course, we had some headwinds. We clearly explained in our presentation as well the commodity prices were at an elevated level and we also had a few one off impact in terms of labor code cost impact, hitting our employee cost and other factors as well. So near term the commodity headwinds are expected to continue. I think we need to admit that at the same time we also have some positive levers for us to drive the margins in the positive direction, you know, even in financial year 27.
I would like to, you know, just give a little bit more details on this. Number one is the volume growth itself. See we have already guided 8 to 10% of growth both in domestic as well as export markets. Number two, the price increases, multiple price increases which we have done and that should also support our margins to some extent. And third important point is the utilization level of our Chennai plant. See, as you know, Chennai plant utilization has come down a bit after we shifted our revenue to the Pune plant.
But now that the two upcoming two products, both will be coming from the Chennai plant, that should help to increase the overall output and improve the capacity utilization of Chennai plant. And obviously that should support my margins as well. Number four, there are few one offs as I indicated in terms of commodity and labor code impact. So that should not ideally repeat in the upcoming quarters. And last but not the least, if you see the cost optimization measures, whatever we have been doing in terms of localization enhancement and value engineering efforts, these efforts should continue even in the upcoming future as well.
So you know, if you consider all these factors, that is clearly giving us a confidence that we can still deliver margins, you know, within the range of 11 to 14% in the upcoming year. Hope I’ve answered your question, Kapil.
Kapil Singh
Yes, thanks. A very, very helpful and detailed answer. So second question is on just on the growth for both domestic and exports, particularly in exports, I noticed that our exposure to Middle east is quite high. But we are still guided for 10% growth and our volumes have been fairly resilient. So just some color there would be helpful. And similarly for domestic as well, 7 to 10% growth. Do you think you will gain market share this year given that you are having new launches? So some color on the domestic demand side.
That’s all from my side.
K.S. Hariharan
Yes. Kapil, first of all on the export front, correct. The after the war started we have been impacted by this. The. The war situation. Our exposed to Middle east have taken a hit. But we have been taking some countermeasures to, to protect our export volumes. Number one, we have been aggressively focusing on Other markets, right. Even in the last quarter we, we kind of increased our shipments to some of the markets like Latin America, Mexico. That has really helped us to some extent. Number two, we are also continuously strengthening our product offerings for the overseas markets as well.
The new venue, a lot of opportunities for us in the days to come. Verna Pe Exter pe. Even the LHG version of xter, that should also support our volumes to some extent. Plus even the two new nameplates which will come this year, not just for domestic market. I think it will be considered for export also in due course of time. And one more important point is if you see the demand as such, it has been pretty strong for us, quite healthy across markets. Even in Middle east also we are having a healthy backorder with us.
So that is giving us the confidence that, that once the whole macro and geopolitical condition starts improving, the volumes should come back very strongly for us. And so is the reason we were able to give a guidance of 8 to 10% growth even in fiscal year 27 in a totally uncertain environment. We hope that we can definitely achieve our targets, whatever we have promised. Now
Tarun Garg
The second question on domestic. If you see Kapil Crystal and ICRA, the forecast is 3 to 5% or 4 to 6%. Very difficult to see, you know, in this kind of situation. So we believe 8 to 10% with the, with like we said, like I said in my opening remarks that we will be looking to, if in case any more opportunity comes. We have the capacity, of course, we have the new model. So we will, we will be very quick, very agile to grab that. So we are fairly confident that we will be able to outpace the industry in this fiscal and gain market share.
Thank you.
Kapil Singh
Okay, great sir, best wishes.
Operator
Thank you. Next question is from the line of Binay Singh from Morgan Stanley. Please go ahead.
Binay Singh
Hi team. Thanks for the opportunity. Clearly the company will have a very busy year. I can’t recall the last time you had two heavily localized nameplate launches in one year. And just on that, you know, in the presentation that we did in October, we talked about two launches over FY27, FY28. So is this, are these the two? So in a way we’ll be done for two years with this. Is that the correct understanding?
Tarun Garg
So you remember you have a sharp memory. So we are exactly sticking to whatever we, whatever we said at this point of time. If you see by now we would have launched one full model change, which was the venue one derivative, which was the venue in line two facelifts which were Exter and Varna P. So last fiscal exactly as per that and of course for the next two years we had given I think three full model changes, two new models. So Binet, we are going exactly as per that. Whatever we had guided I think beyond this.
Of course if more opportunities come we will look at it. But as of now you can say that we stand heavily committed to whatever we had told you.
Binay Singh
Right. And just secondly linked to that any guidance on what timing do we expect during the year? You know the reason I ask is because when I look at your March volumes on the domestic side and if I just annualize that not the right way to do given March is usually a big quarter but that itself will imply a very healthy 10% plus domestic growth for us in financial year 27. So is it fair to assume that you are basically not building much volumes from these models into your 8 10% guidance for now or any timeline you could say is it towards the end of the year or so?
Tarun Garg
I think we have given enough guidance on this. I can only say that of course April volumes were already 17%. Like I said, the geopolitics situation is very fluid. We still don’t know about what will happen in the Iran war and all. So what we are saying is we are very agile and very flexible and we will see how the opportunities come. And the volume from these two models is going to be substantial. So it’s not going to be like very small, it’s going to be substantial even in this fiscal.
Binay Singh
No, no. That clearly exciting year ahead. We’ll keenly watch. Thanks again for increased disclosures. Thanks team.
Tarun Garg
Thank you.
Operator
Thank you. We’ll take our next question from the line of Raghunandan Nl from Nuama Research. Please go ahead.
Raghunandhan NL
Thank you sir for the opportunity and heartening to see the positive outlook for FY27 with regards to the CAPEX of 7500 crores. Can you please indicate the areas and indicate a broad breakdown if possible?
K.S. Hariharan
Raghu Hari, Capex plan? Yes. Out of this 7,500 crores a major part roughly around 45 to 50% would go into the upcoming new products. That is number one. Number two, roughly around 30% of the whole Capex will also go into plant related investments. When I say that that means some portion will go for the phase two expansion in Pune and there will be some investments for upgradation of the Chennai plant as well. So that is a broader plan. I know as far as Capex is concerned.
Raghunandhan NL
Thank you Hari. Very helpful. And also with Reference to the one off that you mentioned, can you, can you quantify them? Because on a QQ basis employee cost which is up 34% what should be the sustainable number one should look at there and also that 50, 60 basis point within the commodity cost which is not likely to recur. What does that relate to?
K.S. Hariharan
Okay, first of all on employee cost, if you see on a sequential basis we have seen, you know we can understand roughly 100 crores increase which is reflected. Large part of this relates to the impact of labor code provisions and there is some, you know, accounting impact relating to the actuarial provisions also some assumptions we have revisited. So that is also reflected there. We can understand that major part of this is kind of a one off should not ideally repeat in the upcoming quarter. And on commodity the one off impact refers to basically we, we paid some vendor compensation during the quarter for the past period.
So that is the reason I mentioned that it is a kind of one off for us. Hope it is clear. Abu,
Raghunandhan NL
Thank you very much. That is very helpful. Just the last one, almost 90 sales outlets have been added this year. And how has been the focus on the rural side and going forward how do you target the increase in network? That’s all from my end.
Tarun Garg
So Raghu, we are going very strong on the network overall also. And like I mentioned in my last call as well, almost 7 out of 10 outlets are coming in the rural areas. The good part Raghu is one, of course rural penetration continues to increase. Quarter one was 22.6, it moved to 23.6 in the next quarter. Then quarter three 24.1 and quarter four was at historic high 24.7. But the best part is now, now the urban has also started growing. So first two quarters urban was negative. Then quarter three it became plus one and now quarter four plus seven.
So we believe that going forward, especially post gst, the opportunities in rural are also very strong supported by our network, you know and of course our marketing activities, our 30 year celebration. So we believe that our focus will continue at least for the next couple of years in this ratio of 7 is to 3 broadly 7 outlets in urban. Oh sorry in rural versus 3 outlets in urban. I think that pretty much takes care of, you know, our, our plan going forward. Thank you.
Raghunandhan NL
Thank you sir, Very helpful. I’ll fall back to the queue.
Operator
Next question is from the line of Chandra Moli Muthaya from Goldman Sachs. Please go ahead.
Chandramouli Muthiah
Hi, good evening and thank you for taking my questions. My first question is this another clarification on the product Launch disclosures. Thank you for those disclosures. You did mention in the prepared remarks that you expect a substantial volume aggression this year from these two new product launches. So just want to understand are they likely to be sort of in timing terms pre festive season and just also related to the product launch point. Now that there’ll be two launches this year, is it fair to assume that the MPV and the off roaders might actually be more in the FY29 FY30 launch cycle?
Tarun Garg
I’m not commenting, you’re not luring me into any further disclosures. So sorry. I think like I said, two new nameplates in this fiscal is what we are sticking to. These Both will be SUVs. One will be in the ICE, one will be in the EV, the ICE, one will be in THE MID SUV. EV will be in the compact SUV and it will be a dedicated EV and both will have substantial volumes. So I think, I’m sorry but I’m only repeating. I. I don’t have anything further to add and we are sticking strongly to the investor day commitment which we made, you know, in terms of launch plan.
Thank you.
Chandramouli Muthiah
Well understood. Well I understand. Thanks. The second question is just related to margin. So some of the two wheeler makers who reported and made given commentary on on commodity costs have indicated that commodity inflation could be anywhere between 300 to 400 basis points headwind in the upcoming quarters. So just you know similar to the margin bridge that you’ve given. Just want to understand thinking about the factors heading into sort of first half of next fiscal. Is that sort of a similar range for the car industry as well to keep in mind as sort of a gross headwind on the commodity front in terms of gross margin for the company.
K.S. Hariharan
Chandra Hari here of course very difficult to give a guidance on how much the commodity will increase because it is highly volatile. Right. But near term there is, there is expected to be some pressure should be there. But as I mentioned earlier also how we are managing this whole situation, number one is through the cost reduction efforts with localization and other activities. Number two, we have been taking some calibrated price increases also. Right. You know already as you know that whatever price increase which we did last quarter and there is one more to come in the month of May as well.
So I think broadly this should take care of you know, the whole profitability, you know as such and our you know strategy is we want to take a proper balance between volumes and profitability. So the price increase also is something we need to look at the overall market Condition accordingly. We’ll take a, you know, a calibrated call on this aspect.
Chandramouli Muthiah
Got it, got it. And last quick follow up is just on Cafe 3. Three quarters back you did make a disclosure that you had done close to 113 grams per km CO2 in 1Q this year. So I just want to understand how you ended FY26 in terms of Cafe3 and what your targets might be target ranges might be for FY27.
Tarun Garg
Just a correction. Fiscal 26 was Cafe 2, not Cafe 3. So Cafe 2, the target was 117.585. Yeah, yeah, yeah. So target was 117.585. We ended with 114.49. This is minus 3.095. So we are much better, you know, because we are much better than the target. This is as per our internal calculation. And like I said, we are very confident about the Cafe 3 as well. Of course only draft has come so far. But based on that draft and based on our powertrain plan, we are very confident we are going to meet Cafe 3 as well.
Hope that answers your question.
Chandramouli Muthiah
Thank you very much and all the best.
Tarun Garg
Thank you.
Operator
Thank you. We’ll take our next question from the line of Gunjan Pratyani from Bank of America. Please go ahead.
Gunjan Prithyani
Hi, thanks for taking my question. Just two follow ups. One on the margin, can you talk about the discounts for this quarter and also where we are on the new plant related cost? I mean there was supposed to be some 30, 40 basis point of impact to come in this quarter as it fully reflected or something else that we need to bear in mind.
K.S. Hariharan
Hi Gunja, Hari. First of all on the discounts this quarter, quarter four we have reduced our discount substantially. In third quarter the discount was 2.6% on ASP. Now in quarter four the number reduced to 1.9%. Right. And number two, in terms of the Pune cost we already indicated earlier also you know, there are elements in terms of, you know, the overhead cost and depreciation. Those things generally, you know, have an impact on the margins. What happens is, you know, as we do more ramp up of operations, obviously there might be increase in some cost elements.
But at the same time we are also increasing our volumes as well. If you see venue, which is what we are producing from Pune plant already we are seeing a strong traction in the domestic market. We are continuously trying to increase the overall production and sales volumes and even export also. There are a lot of opportunities we are looking at for the new venue. So if you see collectively the increased Volumes should be able to help us to absorb all these fixed costs as early as possible. And you know, that should improve the margins as well.
Hope I’m clear. Gunjan.
Gunjan Prithyani
Got it. I’m just checking from a depreciation perspective, is that fully reflected in this quarter or there could be more increase that we were expecting to show up in this quarter.
K.S. Hariharan
Of course see last quarter the major impact was already reflected in third quarter. Again as I mentioned that whenever we do some ramp up, you know, obviously that will lead to some increase in the cost elements. So but again the volume should take care of all these, you know, increased cost.
Gunjan Prithyani
Okay, got it. And second question on CAFE norms, any can you share a little bit more about the new EV model that you know that is due for launch this year? You did mention it’s compact, that SUV model, but is this a model that sort of comfortably puts her in, puts us in the CAFE compliance? Anything that you can talk us through and you know, in terms of what is the EV share within the portfolio that’s needed over a three year or a five year horizon to be compliant with the CAFE norms? And is this the model that sort of can be the volume model for us?
Tarun Garg
We have given many disclosures today. Like we said, it’s our first mass market dedicated EV from Hyundai. It has been designed and made keeping India in mind. It is going to come in this fiscal much before the Cafe3 norms kick in and we are expecting it to be in a high volume segment. That is point of 1 point number 2. Of course it will be a big booster for us for cafe. But CAFE is not only about one model and one evidence. I think we have a very robust plan of a comprehensive plan for cafe and I think we are very clearly making a disclosure that we are very confident about meeting the cafe 3.
I think at this point beyond this it will be very difficult for me to say anything but as we go along during the year you will see we talking more and more about these new launches I think which will. But we don’t want to tell everything today because we have to build the excitement, keep the excitement running as well. Well, yeah, thank you.
Gunjan Prithyani
Sure. Understand. Can I just follow up on the profitability, you know this 11% to 14% range that as the, this mass EV volume model comes through, does that have any bearing on the margin in the near term or anything? I mean this is not going to be as profitable as the rest of the portfolio. So how do we think about the ramp up of this model in context of the overall portfolio margin
Tarun Garg
Look, when the range of 11 to 14% has been given, it takes into account all the new models in all the segments, whether it is EV or petrol or hybrid or diesel or SUV or small cars. So trust us, I mean, we have done our calculations and. But beyond this, to get into, okay, this model, how much profit, it will be very, very difficult for us to give more details. But like I said, it is well documented and we have been very responsible in our margin guidance. And that is why, you see, it’s a broad 11 to 14% guidance, you know, and we are very confident that, yes, we will achieve this.
Yeah, thank you.
Gunjan Prithyani
Got it. Thank you so much.
Operator
Thank you. Next question is from the line of Manit Pirani from JP Morgan. Please go ahead.
Amyn Pirani
Hi, thanks for the opportunity and thanks for the detailed disclosure on the outlook. My first question is on the esue, just want to check, you know, is this also the product in which you would be embarking on the cell localization project? Also in which Hyundai group as a group has tied up with, you know, a local player for cell localization as well. So just wanted to check on that.
Tarun Garg
So like I said for today, the disclosures have already been made. I think. Please wait going forward for more announcements on this. Yeah, thank you.
Amyn Pirani
Sure, sure, sure. Fair enough. Secondly, just on your point that both these products will be coming in the Chennai plant. So I just wanted to understand, given that the Pune plant still has a lot of capacity ramp up to happen and given that as of now we only know about the venue, if both of these are going to Chennai, how does the overall utilization and fixed cost absorption work? Because we thought that maybe these will come in Pune. So just for my understanding, you know, how does the overall level work on fixed cost absorption and utilization?
It
Tarun Garg
Works. It works beautifully. Because you know, frankly speaking, in two shifts, Pune plant cannot do much more than the current level of 130, 140. Of course, we are trying to do best. Like I said, we started with 8,000 per month. We have already moved to 12,000 per month. But like we said, Pune planned on a three shift is what, 170,000. So there is, unless we add a shift to the Pune plant, you know how much more you can do. So Chennai plant provides us with a great opportunity because if you see one very good reason for our strong profitability all these years has been the 90, 95% capacity utilization in the Chennai plant.
But because the venue was shifted, we had this temporary, you know, drop in the capacity utilization. And now with these two models going to Chennai we will be very good in Chennai anyway. We are very good in Pune especially in a two shift operation. And like Hari mentioned, we will look at the third shift also in case we feel that this volumes are enough to support a three shift operation. Thank you.
Amyn Pirani
Okay, thank you. Thank you. And just the last question, you know, on the, on the PBT bridge, you know Hari, if you can. So you know, if I look at the quarter on quarter Q4 over Q3, you know you mentioned that volume and mix was a slight positive. Now given that actually your mix this quarter was significantly adverse because exports were lower as well as I think the SUV mix was lower relatively. Are we to understand that volume was, you know, high enough to offset the mix impact and volume is a bigger driver than mix?
Just wanted to understand that.
K.S. Hariharan
Yes, I mean that’s the broader understanding. So you know, we had better volumes especially in the domestic market. So that has really helped us on a sequential basis.
Tarun Garg
At the same time, like I said, like we said, two new SUVs in the next year will ensure that we start we grow in very well in the SUV segment. And this is an added advantage that all the segments have started growing. So we are not complaining at all. And like we said because it is helping, really helping the Chennai capacity utilization even before the new models are kicking in. Thank you.
Amyn Pirani
Great. Thanks for this. I’ll come back in the queue. Thank you.
Operator
Thank you. We’ll take our next question from the line of Arvind Sharma from Citi. Please go ahead.
Arvind Sharma
Hi, good evening sir. Thank you for taking my question first would be in the exports guidance at almost 8 to 10% growth. Previously capacity would have been a constraint. But now that your capacity has increased significantly, what’s the underlying basis for 8 to 10% growth? Are you pricing in the current adverse geopolitics or is 8 to 10% growth an intended growth on the exports part? That’s the overall growth as well.
K.S. Hariharan
Hi Arvind. See again if you look at the overall situation, so quite dynamic in nature, our Middle east volumes have been impacted even in the last quarter, especially in March. Right. So near term we are looking at some challenges especially for Middle East. Of course we are also looking at some alternate options in terms of can we take some alternate shipping route. So these are all some of the things we are also evaluating. But as I mentioned earlier also there are lot of other options we have in terms of, of you know, other markets and you know, the product strategy as well.
So if you, if you take collectively all these things, you know that should help us to achieve this 8 to 10% growth, whatever we have guided. Thank you.
Arvind Sharma
All right. Thank you, sir. Thanks. Thanks, Ayesha. And on this 70,000 incremental capacity expansion in Pune post phase 2. What’s the timeline for this? It wasn’t FY30 and the current capacity itself is fairly high. So again, what is the driving factor behind this significant capacity expansion beyond phase two?
Tarun Garg
So very simple. 170,000. Phase one already done. 80,000 in 2028 will bring it to 250. And then the balance 70,000 will come between 28 and 30 to bring it to 320. And the driving force is of course the addition of more models. So today is only one model then the second model. And I mean beyond that of course. No more disclosures for today.
Operator
Thank you so much. That’s all from my side. Thank you. Ladies and gentlemen. We’ll take that as the last question for today. I now hand over the conference to the management team for closing comments. Over to you.
Tarun Garg
Thank you. Thank
K.S. Hariharan
You. Yeah. Yeah. So thanks everyone for joining the call. We will wind up this meeting now. Thank you so much for your participation.
Operator
Thank you on behalf of Hyundai Motor India limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.