Auto Sector rebounds on strong sales, improved earnings forecasts

July 22,2025 (MLN): Pakistan’s automobile industry is showing signs of a strong recovery in FY25, driven by improved sales volumes, better cost management, and a favorable interest rate environment.

Several major players in the auto sector are expected to report substantial YoY growth in profits for the fiscal year, although performance remains mixed across individual companies highlighted by a recent earnings preview by Arif Habib Limited (AHL).

Rising consumer demand, easing supply chain constraints, and strategic product mix improvements have contributed to this upward trend.

Honda Atlas Cars (HCAR): Earnings to Soar 5.5x YoY in 1QMY26

Honda Atlas Cars is projected to post a net profit of Rs1.11 billion (EPS: Rs7.8) for 1QMY26, marking a 5.5x increase from the same period last year.

The sharp rise is attributed to a 5.5x YoY increase in unit sales to 5,682 vehicles,

Although revenues are expected to dip 2% QoQ due to a strong base in January, gross margins have improved to 10.1%, a sign of stronger pricing power and effective cost control.

Finance costs are also expected to drop by 75% significantly amid lower borrowings and interest rates, according to the estimations by AHL.

Additionally, the company has officially announced plans to introduce Hybrid Electric Vehicle (HEV) models in the near future.

Honda Atlas’s push for hybrid models and the historic export of 38 locally built City 1.2L units to Japan earlier this year signal its drive for innovation and global quality standards.

Indus Motor Company (INDU): 62% YoY Profit Growth in FY25 Expected

Indus Motor is forecasted to record net earnings of Rs24.42bn (EPS: Rs310.7) for FY25, up 62% YoY.

The turnaround stems from a low base last year due to production shutdowns and supply chain hurdles. In 4QFY25 alone, profits are estimated at Rs7.87bn, driven by a 173% increase in unit sales to 11,775 vehicles.

The estimates further revealed that the company is also likely to announce a final cash dividend of Rs60.1/share, taking full-year payouts to Rs186/share.

Sazgar Engineering Works (SAZEW): PAT to Double in FY25

Sazgar is anticipated to report a 122% YoY jump in profit to Rs17.61bn (EPS: Rs291.37) for FY25, supported by higher sales of Haval SUVs and three-wheelers. In 4QFY25, earnings are projected at Rs4.76bn.

In June, sales of four-wheelers reached 1,349 units and three-wheelers stood at 2,435 units, marking a MoM increase of 47% and 31%, respectively.

However, other income is expected to decline significantly due to falling interest rates.

The company is expected to declare a dividend of Rs12/share for the quarter and Rs44/share for the full year, as per estimates by AHL.

Millat Tractors Limited (MTL): Profits to Decline 20% on Volume Drop

Millat Tractors is likely to post a 20% YoY decrease in net profit, totaling Rs6.26bn (EPS: Rs32.64) for FY25.

The decline is driven by a 38% drop in annual tractor sales to 18,580 units largely due to soft farm economics and sales tax disruptions that dampened demand during the year.

For 4QFY25, earnings are expected at Rs1.25bn.

Despite the lower topline, AHL anticipates that gross margins improved to 28% during the quarter, while finance costs declined by 25% YoY amid a softer interest rate environment.

Looking ahead, MTL is poised for a strong recovery in FY26, supported by the Punjab Government’s Green Tractor Scheme Phase-II.

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