Karachi: Honda Atlas Car Pakistan (HCAR) has reported a 16% year-on-year increase in its earnings per share (EPS) for the third quarter of the fiscal year 2026, with figures reaching Rs4.59. However, this marks a 12% decline from the previous quarter and falls short of industry expectations.

According to JS Global, the third-quarter results were impacted by lower-than-expected gross margins and a higher effective tax rate. Gross margins recorded a decrease, settling at 7.55% compared to 9.21% in the same period last year and 7.56% in the preceding quarter. The company had projected gross margins of 9%.

HCAR reported net sales of Rs33.1 billion, reflecting an 86% increase from the previous year and a 30% rise from the last quarter, driven by higher sales volumes, which surged by 92% year-on-year and 47% quarter-on-quarter to 7,159 units. Despite the increased sales, distribution expenses surged by 3.1 times from the previous year to Rs451 million, and administrative expenses rose by 27% year-on-year.

The effective tax rate increased to 45.5% from 43.13% in the same period last year and 33.86% in the previous quarter. Other income saw a 97% year-on-year increase but declined by 24% from the prior quarter.

In the nine months of the fiscal year 2026, HCAR's profits reached Rs2.2 million, marking a 2.2 times increase from the previous year, with gross margins slightly improving to 7.88%. The effective tax rate for the nine-month period was 41.19%, compared to 43.14% in the previous year. The company maintains a hold stance on its stock, with current trading at a price-to-earnings ratio of 8.5/8.3 for MY26E/MY27F.