Honda Atlas Cars gains Rs 742 m profit

Honda Atlas Cars (Pakistan) Limited (HCAR) posted a Rs 742 mn profit in 2Q MY26 (EPS Rs 5.2), up 2.9× YoY but down 10% QoQ.

In its 2Q MY26 results, Honda Atlas Cars (Pakistan) reported a profit after tax of Rs 742 million, equating to earnings per share of Rs 5.20, reflecting a 2.9‐fold increase from the same quarter last year.

The company’s net sales climbed to Rs 25.4 billion, up 53% year-on-year, driven by a 46% increase in unit sales to 4,880 cars, though volume was down 12% quarter-on-quarter and overall sales down 4% QoQ.Honda Atlas enhances car prices

Gross margin improved to 7.6% in 2Q MY26 up from 7.4% in 2Q MY25, but fell from 8.6% in 1Q MY26. The margin improvement YoY was attributed to recovery in the auto sector and higher volumes, whereas the quarter-on‐quarter dip reflects increased cost pressure.

Distribution expenses rose 65% YoY to Rs 298 million but dropped 15% QoQ. Administrative expenses were up 40% YoY, 2% QoQ, while “other charges” were flat YoY and declined 68% QoQ to Rs 67 million. Other income surged 5.9× YoY to Rs 496 million, though it was down 11% QoQ. The effective tax rate was 33.86% in the quarter, lower than 39.58% in 2Q MY25 and 43.26% in 1Q MY26.

For the six-month period (1H MY26) the company recorded a profit of Rs 1.6 billion (EPS Rs 11.0), 3.4× higher than in 1H MY25. Gross margins for the half year improved to 8.08% from 6.84% the prior year, while the effective tax rate for the half stood at 39.18% versus 43.16% 1H MY25.

Despite the strong top‐line growth and profit surge, the market reaction was tempered as gross margins fell sequentially and the performance came in below industry expectations. Broker commentary notes that while HCAR is trading at a projected P/E of 9.2x for MY26E and 9.0x for MY27F, with a dividend yield of roughly 4%, the margin pressure and broader auto-sector challenges justify a “Hold” stance for now.

The results highlight the improving demand backdrop in Pakistan’s automobile sector, but also underline margin vulnerability to input cost increases, currency fluctuations and slower sales trends. Going forward, Honda Atlas Cars (Pakistan) will be closely watched for its ability to sustain volume recovery, improve cost efficiencies and manage margin erosion in a competitive market.