Honda Atlas Cars (Pakistan) Ltd. conducted an analyst briefing today to discuss the company’s results for the fiscal year 2025 and its future outlook. Key highlights from AKD Research include:
– In MY25, the company achieved a topline of PKR 78 billion, compared to PKR 55 billion in MY24, marking a 42% year-over-year (YoY) increase. This growth was driven by a significant rise in sales volume, which soared to 16,100 units in MY25 from 10,534 units in the same period last year, reflecting a 53% YoY increase.
– Gross margins improved in MY25, reaching 8.5%, up from 8.2% in MY24, thanks to currency stability compared to the previous year.
– The company’s earnings for the year amounted to PKR 2.7 billion (EPS: PKR 19.0), compared to PKR 2.3 billion (EPS: PKR 16.3) in the previous year, representing a 16.6% YoY increase due to the factors mentioned above.
– The effective tax rate (ETR) for MY25 was 17.27%, influenced by tax benefits the company claimed during the year, leading to a significant increase in the bottom line.
– Management reported that the sales mix for the Honda City consists of 75% 1.2L variants and 25% 1.5L variants.
– Additionally, management noted that overall passenger car market volumes rose by 67% YoY, reaching 125,533 units compared to 75,227 in the same period last year. This surge was attributed to improving macroeconomic conditions.
– Looking ahead, management projects that the company’s sales volumes will increase by approximately 40-50% YoY during MY26.
– The company has pre-launched a hybrid version of the HR-V and is offering test drives at dealerships nationwide. Management mentioned that they are absorbing the NEV levy tax for the new variant, allowing for a competitive pricing strategy.
– They anticipate selling 400-500 units per month for the newly launched vehicle.
– Localization levels for the Civic/City/BR-V/HR-V are currently at 64%, 74%, 52%, and 61%, respectively.
– During MY25, the company exported 38 units of the 1.2L City to Japan.
– In the future, management expects margins to be impacted by currency devaluation.
– The upcoming NEV policy excludes incentives for hybrid vehicles, offering benefits only for plug-in hybrid electric vehicles (P-HEVs) and battery electric vehicles (EVs).
– Management stated that the recently implemented tariff rationalization will not significantly affect the company’s sales volume, as 90% of imported cars are in the under-1000cc segment.
– We have a ‘BUY’ stance on HCAR with a target price of PKR 451 per share by June 2026, driven by i) decreasing financing rates, ii) improving macroeconomic indicators, and iii) the company’s presence in the HEV segment, and iv) stable margins amid decline in CRC/HRC prices.
Courtesy- AKD Research
