Honda’s Profit Up 16%

Staff Report:
Islamabad: Honda Atlas Car Pakistan (HCAR) announced its year end, MY25, result on Thursday, where the company recorded profit of Rs2.7bn (EPS of Rs18.97), up 16%. The result came higher than industry expectations.

In 4QMY25 earnings clocked in at Rs1.7bn (EPS of Rs11.78) compared to 4QMY24 profit of Rs1.4bn (EPS of Rs9.6), up 23% YoY and 2.97x QoQ.

The earnings jump in the last quarter is due to higher gross margins of 10.1% compared to our expectations of 9.0%. These 4QMY25 gross margins are also higher than 8.4% recorded in 4QMY24 and 9.2% in 3QMY25.

Additionally, tax refund of Rs214mn was recorded in 4QMY25, compared to Rs618mn in 4QMY24.

This has resulted in the effective tax rate to 17.3% for MY25, up from 15.2% in MY24.

Net sales had surged by 11% YoY and 55% QoQ to Rs27.7bn in 4QMY25.

Cars’ sale up 51% to 46,398 units during Jul-Dec

It was driven by an increase in units sold to 5,692 units in 4QMY25 against 5,044 units in 4QMFY24 and 3,736 units in 3QMY25.

In 4QMY25, distribution expenses have witnessed an increase of 43% YoY and 3.7x QoQ to Rs544mn due to increase in volumetric sales.

Other income rose by 2.3x YoY and 95% QoQ to Rs370mn in 4QMY25 mainly due to increase in cash and cash equivalents.

HCAR is currently trading at MY26F and MY27F P/E multiples of 12.9x and 11.5x, respectively, with a dividend yield of 4% for MY26F and 4% for MY27F.