Honda Atlas Cars Limited (HCAR) declared its 4QM2022 result today, where earnings clocked in at Rs197mn (EPS: Rs1.38) as compared to revenues of Rs895mn (EPS: Rs4.60) in the same period last year. This takes MY22 earnings to Rs2,510mn (EPS: Rs17.58), up 40% YoY.

Along with the result, the company announced a final cash dividend of Rs7.0/share – in line with our expectations.

The result came lower than expected, with a major deviation from higher than expected distribution expenses and taxation.

The company’s revenues recorded an increase of 35% YoY in 4QMY22, in line with our estimates due to volumetric growth of 30% YoY and an uptick in car prices company’s gross margins clocked in at 4.5% during the quarter, with lower than margins of 5.2% recorded in 4QMY21. However, on a sequential basis, margins improved by 1.8pts due to an uptick in car prices. The company had increased prices in Nov-21, whose impact is reflected in this quarter and the rollover of the new C, civic, which uplifted their margins.

Distribution and marketing costs increased by 94% YoY and 238% QoQ to clock in at Rs613mn probably due to marketing campaigns of the new 11th Generation Civic. The effective tax rate has clocked in at 76% in 4QMY22 compared to 13% in 4QMY21. The company is subject to turnover tax, which has increased its taxation.

Courtesy- AHCML Research