Honda Pakistan’s Q3 Profits Up by Massive 300%

Honda Atlas Cars (Pakistan) Limited (PSX: HCAR) has announced its 3QMY25 result today posting a profit of Rs. 566 million, up 2.95x YoY and 2.2x QoQ. This takes 9MMY25 earnings to Rs. 1.03 billion compared to 9MMY24 profit of Rs. 964 million, up 7 percent YoY. The result came higher than industry expectations. According to Topline Securities, the earnings jump in the 3QMY25 is due to higher gross margins of 9.2 percent compared to our expectations of 8.3 percent. These 3QMY25 gross margins are also higher than the 8.3 percent recorded in 3QMY24 and 7.4 percent in 2QMY25. Distribution expenses saw a significant decline of 20 percent YoY and 19 percent QoQ to Rs. 147 million, while other operating expenses dropped sharply by 72 percent YoY and 74 percent QoQ to Rs. 17 million, further contributing to the rise in earnings. This is mainly due to a significant fall in overall inflation. Net sales rose by 44 percent YoY and 8 percent QoQ to Rs. 17.8 billion 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 percent YoY and 4 percent QoQ to Rs. 457 million in 3QMY25. Other income fell by 34 percent YoY while rose 2.24x QoQ to Rs. 190 million in 3QMY25. This decline is due to shorter delivery times for cars. The effective tax rate stood at 43 percent for 3QMY25, compared to 37 percent in 3QMY24 and 40 percent in 2QMY25. The company posted earnings per share (EPS) of Rs. 3.97 for Q3 and an EPS of Rs. 7.19 for 9M. HCAR is currently trading at MY25E and MY26F PE of 26.35x and 14.38x with dividend yields of 2 percent and 3 percent. respectively.