AKD Securities Limited - Off the Analyst's Desk.

Karachi -- January 26, 2023 (PPI-OT)

HCAR: 3QMY23 Result Review

Honda Atlas Cars Limited (HCAR) announced it 3QMY23 result today, where it posted exceptional returns culminating to a NPAT of PkR811mn (EPS: PkR5.7) compared to loss of PkR385mn (LPS: PkR2.7) in the second quarter. This brings cumulative earnings for 9mMY23 to PkR1.1bn (EPS: PkR7.6). The performance in the quarter is well above industry expectations due to a significant hike in gross margins, likely driven by higher effective prices after the revision in August, along with the launch of HR-V helping boost margins.

Revenue for the quarter has increased by 17%QoQ to reach PkR22.9bn, while down by 22%YoY. While offtakes have remained relatively flat on a QoQ basis, the increase in effective prices has driven the jump in revenue on the quarterly basis.

Distribution and marketing expenses have surprisingly remained flat QoQ despite the launch of a new product in the HR-V. Furthermore, the launch of the new product has also likely boosted margins, clocking in at 7.8% vs. the 3.4% recorded in the previous quarter. To note, the HR-V has contributed to 23% of the sales mix in...