Karachi: The latest earnings preview for Pakistan's auto industry indicates a significant rise in profitability, driven by increased sales volumes and improved gross margins. Both Indus Motor Company (INDU) and Honda Atlas Cars (Pakistan) Ltd. (HCAR) are expected to report substantial year-on-year growth in their respective financial results for the upcoming quarters.
According to a statement by AKD Securities Limited, Indus Motor Company (INDU) is projected to achieve earnings of PKR 4.7 billion (EPS: PKR 60.3) for the second quarter of fiscal year 2025, reflecting 2.7 times increase compared to the same period last year. This growth is largely attributed to 2.4 times rise in total sales volumes, reaching 6,383 units, compared to 2,687 units during the same period in the previous year. The increase in sales is linked to a low base from last year, which experienced supply chain disruptions and plant shutdowns.
The topline for INDU is anticipated to rise by 2.5 times year-on-year, with contributions from the inclusion of Corolla Cross sales. Gross margins are expected to improve to 14.8% due to a decrease in CRC/HRC prices. However, operating expenses are projected to increase by 27% year-on-year, driven by higher sales volumes and advertising costs linked to the Corolla Cross launch. An interim dividend of PKR 36.0 per share is anticipated, with a 'BUY' recommendation on the stock and a December 2025 target price of PKR 3,350 per share.
Meanwhile, Honda Atlas Cars (Pakistan) Ltd. (HCAR) is forecasted to report third quarter earnings of PKR 498 million (EPS: PKR 3.49), 3.5 times increase from the previous year. The anticipated increase in profitability is due to a 57% year-on-year rise in sales volumes, following last year's plant shutdowns.
HCAR's topline is expected to grow by 50% year-on-year to PKR 18.6 billion, with gross margins projected to increase to 8.6%, partly due to the decline in CRC/HRC prices and a higher proportion of Civic sales. Despite a 76% year-on-year contraction in other income, the stock maintains a 'BUY' call with a target price of PKR 426 per share for December 2025.