Karachi: Indus Motor Company Ltd. (INDU) is projected to show a significant earnings increase for the first quarter of FY25, driven by higher gross margins and robust sales, particularly from the new Corolla Cross and Yaris models. In contrast, Honda Atlas Cars Ltd. (HCAR) anticipates a sharp decline in its earnings for the second quarter, due to lower gross margins and a shift towards lower-end models.
According to AKD Securities Limited, Indus Motor is expected to report earnings of PKR 4.2 billion, up 32% year-over-year, with earnings per share rising to PKR 53.9 from PKR 40.9 in the same period last year. This increase is largely due to improved gross margins of 13.3%, up from 10.1%, bolstered by the appreciation of the currency. Total sales are anticipated to reach PKR 42.9 billion, with vehicle sales volumes increasing by 37% to 6,160 units. Despite higher operating expenses due to the launch of the Corolla Cross, INDU is also expected to announce an interim dividend of PKR 32.0 per share.
Conversely, Honda Atlas is set to experience a downturn, with projected earnings of PKR 178 million, a 74% decrease from the previous year. This decline reflects a contraction in gross margins to 8% from 11%, primarily due to a shift in the sales mix towards the lower-end 1.2L City model and a decrease in Civic sales. Total revenue for Honda Atlas is expected to fall to PKR 10.6 billion, with a 17% decline in sales volumes to 2,079 units. However, the company is likely to benefit from a 9% decrease in finance costs due to reduced borrowings amid falling interest rates.
Honda Atlas currently holds a "HOLD" recommendation from analysts, with a target price of PKR 320 per share by June 2025.