Honda Atlas Car Pakistan (HCAR) has reported a great improvement in earnings, posting a profit after tax (PAT) of Rs. 2.227 billion for the first nine months of MY26 (9MMY26), compared with Rs. 1.027 billion in the same period last year.
For the third quarter of MY26 (3QMY26), the company recorded a net profit of Rs. 655 million, translating into earnings per share (EPS) of Rs. 4.59. This reflects a 16 per cent increase year-on-year, although profits declined 12 per cent on a quarter-on-quarter basis. The quarterly result came in below market expectations, mainly due to weaker-than-anticipated gross margins and a higher effective tax rate.
Gross margins in 3QMY26 stood at 7.55 per cent, down from 9.22 per cent in 3QMY25 and largely flat compared to 7.56 per cent in the previous quarter. Analysts had expected margins closer to 9 per cent. Meanwhile, the effective tax rate rose to 45.5 per cent during the quarter, compared to 43.14 per cent last year and 33.86 per cent in 2QMY26.
Net sales surged to Rs. 33.1 billion in 3QMY26, up 86 per cent year-on-year and 30 per cent quarter-on-quarter, driven by a sharp rise in sales volumes. Unit sales increased 92 per cent year-on-year and 47 per cent quarter-on-quarter to 7,159 vehicles.
On the cost side, distribution expenses climbed sharply to Rs. 451 million, rising 3.1 times year-on-year and 51 per cent quarter-on-quarter, largely due to higher sales volumes. Administrative expenses increased 27 per cent year-on-year but declined 5 per cent compared to the previous quarter. Other charges rose significantly to Rs. 83 million, while other income nearly doubled year-on-year but fell 24 per cent quarter-on-quarter to Rs. 374 million.
Cumulatively, HCAR’s profit for 9MMY26 reached Rs. 2.2 billion, with EPS of Rs. 15.59, marking a 2.2-times increase compared to last year. Gross margins for the nine months improved slightly to 7.88 per cent, while the effective tax rate eased to 41.2 per cent from 43.15 per cent in 9MMY25.
At current levels, the stock is trading at forward price-to-earnings multiples of 8.5x for MY26E and 8.3x for MY27F.
