Honda Atlas Profits Surge in 3QMY25, Beating Expectations!

Staff Report:
Honda Atlas Car Pakistan (HCAR) announced its 3QMY25 result, 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 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 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.Car Sales Likely to Rise by 30% in Oct 24

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 3QMY24 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 rising 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.