1QFY27: Auto sector profits seen falling 35pc QoQ

Pakistan's listed auto sector is projected to earn a combined Rs12.6 billion in 1QFY27, a 35 percent fall from the previous quarter, according to a research report cited by Business Recorder. The decline follows a 16 percent sequential drop in vehicle volumes, with the auto policy still unsettled and sales tax treatment for hybrids yet to be clarified. Even so, Topline Research estimates sector earnings will edge up 1 percent from Rs12.5 billion a year earlier.

Vehicle sales reached 26,688 units, up 30 percent year-on-year, mainly because volumes rose 52 percent at Honda Atlas Cars (HCAR) and 34 percent at Indus Motor (INDU). Sazgar Engineering Works (SAZEW) is expected to absorb the higher tax on its hybrid variants, pulling the sector's gross margin to an estimated 16.4 percent from 19.5 percent a year earlier. Other income is also seen shrinking 33 percent sequentially, to Rs5.3 billion, as one-off gains tied to the SIDC settlement in the prior quarter did not recur.

Indus Motor is projected to report EPS of Rs87.6, up 2 percent year-on-year, and a dividend of Rs53 per share is anticipated. Honda Atlas Cars is seen posting EPS of Rs5.8, which is 11 percent higher than a year earlier but 67 percent lower than the previous quarter, owing to smaller other income and a normalised effective tax rate.