With profits accelerating, is HCAR a smooth ride for investors?
Key takeaways:
- Net profit for MY25 rose 16% YoY to Rs. 2.7 billion (EPS: Rs. 18.97)
- 4QMY25 EPS surged 23% YoY and nearly 3x QoQ
- Gross margins improved to 10.1% in 4QMY25 vs. 8.4% last year
- Net sales up 11% YoY and 55% QoQ in the final quarter
- Topline Research maintains confidence as stock trades at 12.9x MY26F P/E with 4% yield
Honda Atlas Cars (HCAR) has wrapped up Marketing Year 2025 (MY25) on a high note, posting earnings per share (EPS) of Rs. 18.97, representing a 16% increase YoY. The result came in higher than industry expectations, led by improving gross margins and stronger volumes in the fourth quarter.
Strong Q4 lifts full-year numbers
4QMY25 proved to be a stellar quarter. HCAR recorded Rs. 1.7 billion in profit (EPS: Rs. 11.78)—up 23% YoY and nearly 3x QoQ. Net sales jumped to Rs. 27.7 billion, a 55% increase QoQ, as unit sales rose to 5,692 units, compared to 5,044 units in 4QMY24 and 3,736 units in 3QMY25.
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This demand uptick helped boost gross margins to 10.1%, exceeding Topline’s estimate of 9.0%. These margins also beat both the 8.4% in 4QMY24 and 9.2% in 3QMY25.
Operating performance highlights
| Metric | 4QMY25 | 4QMY24 | YoY | QoQ | MY25 | YoY |
|---|---|---|---|---|---|---|
| Net Sales (Rs mn) | 27,653 | 24,918 | +11% | +55% | 78,066 | +42% |
| Gross Profit | 2,788 | 2,104 | +33% | +70% | 6,664 | +48% |
| PAT (Rs mn) | 1,682 | 1,370 | +23% | +197% | 2,709 | +16% |
| EPS (Rs) | 11.78 | 9.60 | 18.97 | |||
| DPS (Rs) | 8.00 | 6.50 | 8.00 | |||
| Gross Margin | 10.1% | 8.4% | 8.5% | |||
| Effective Tax Rate | 17.3% | 15.2% |
Source: Company Accounts, Topline Securities
Improving profitability drivers
- Other income rose sharply to Rs. 370 million, up 2.3x YoY, on the back of increased cash and cash equivalents.
- Finance cost dropped 43% YoY to Rs. 346 million, aided by declining rates and improved balance sheet efficiency.
- Distribution and admin expenses rose due to higher volumes but remained manageable relative to sales growth.
Valuation & outlook
HCAR is currently trading at MY26F and MY27F P/E multiples of 12.9x and 11.5x, respectively. With an expected dividend yield of 4%, and improving demand outlook, the company remains a solid bet for investors seeking auto sector exposure.
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As consumer confidence rebounds and HCAR continues to deliver margin expansion and volume growth, investors may find value in entering or holding positions at current levels.
Source: Topline Securities
⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →
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