Honda Atlas Car Pakistan (HCAR) announced its 3QMY25 result today, where the company recorded a profit of Rs566mn (EPS of Rs3.97), up 3.95x YoY and 2.2x QoQ. The result came higher than industry expectations.
§ The earnings jump in the 3QMY25 is due to higher gross margins of 9.2% compared to our expectations of 8.3%. These 3QMY25 gross margins are also higher than the 8.3% recorded in 3QMY24 and 7.4% in 2QMY25.
§ Additionally, distribution expenses saw a significant decline of 20% YoY and 19% QoQ to Rs147mn, while other operating expenses dropped sharply by 72% YoY and 74% QoQ to Rs17mn, further contributing to the rise in earnings. This is mainly due to a significant fall in overall inflation.
§ This takes 9MMY25 earnings to Rs1.03bn (EPS of Rs7.19) compared to 9MMY24 profit of Rs964mn (EPS of Rs6.75), up 7% YoY.
§ Net sales rose by 44% YoY and 8% QoQ to Rs17.8bn in 3QMY25, driven by an increase in units sold to 3,736 units in 3QMY25 compared to 2,374 units in 3QMFY24 and 3,348 units in 2QMY25.
§ Administrative expenses increased by 15% YoY and 4% QoQ to Rs457mn in 3QMY25.
§ Other income fell by 34% YoY while rose 2.24x QoQ to Rs190mn in 3QMY25. We believe this decline is due to shorter delivery times for cars.
§ The effective tax rate stood at 43% for 3QMY25, compared to 37% in 3QMY24 and 40% in 2QMY25.
§ HCAR is currently trading at MY25E and MY26F PE of 26.35x and 14.38x with a dividend yield of 2% and 3%, respectively.
Courtesy- Topline Pakistan Research