Honda Atlas Cars Limited has reported a significant turnaround in its financial performance for the quarter ended September 30, 2023, showcasing a robust profit after tax of Rs. 675 million. This marks a substantial improvement compared to the loss of Rs. 385 million in the same period last year , according to an official notification filed by the company with the Pakistan Stock Exchange (PSX).

The notable surge in profit is attributed to enhanced profit margins, which witnessed a remarkable 750 basis point increase on a year-on-year basis. The company’s gross profit during the quarter under review reached Rs. 1.52 billion, reflecting a noteworthy 127 percent YoY growth compared to Rs. 673 million in SPLY. The gross margin also exhibited a significant improvement, standing at 10.9 percent during the quarter, a stark contrast to the 3.4 percent posted in the same period last year.

Analysts at Arif Habib Limited attribute this positive shift to a combination of augmented car prices and lower commodity prices, particularly in steel. The increase in prices, coupled with a successful reduction in operational costs, has contributed to Honda Atlas Cars’ impressive financial performance.

Despite a challenging economic climate, the company managed to navigate a 28.6 percent year-on-year decline in sales during the quarter, amounting to Rs. 13.9 billion, down from Rs. 19.5 billion in the corresponding period last year. The half-year sales figures stood at Rs. 17.7 billion, representing a substantial 64 percent decline on a YoY basis.

In terms of unit sales, Honda Atlas Cars reported a notable increase of 4.2 times quarter-on-quarter, selling 2,510 units during Q2. This surge is attributed to the absence of non-operating days and the company’s ability to meet delivery demands efficiently.

While the company did not announce any dividend payouts for the period, in line with industry expectations, the market responded positively to the financial results. HCAR’s stock at the bourse closed at Rs. 198.05, marking a 7.5 percent increase, or Rs. 13.82, with a turnover of 2.3 million shares on Wednesday.

Despite the positive trajectory, challenges remain, as evidenced by a substantial increase in the company’s finance costs, which soared by 191 percent from Rs. 41 million to Rs. 120 million during the quarter ended September 30, 2023. Additionally, the effective taxation rate for the quarter reached 55 percent.

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