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.
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.
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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.
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.
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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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