HCAR Preview: So far, not so good

July 22, 2019 (MLN): Honda Atlas Cars Limited is all set to announce its financial results for the quarter ended June 30, 2019 on July 23, 2019. While some analyst believe that the company will post positive earnings for the period, others have put forth a contrasting opinion.

Even though majority of research houses have proposed a positive Profit-after-tax figure, the overall projections are still a lot lower than the numbers of corresponding period in last year.

Consistent with the justifications provided by these research houses, the fall in net earnings can be attributed to drop in total sales volume during the period as a result of hike in car prices, which in turn is a consequence of increased in Federal Excise Duty (FED) and persistent PKR devaluation.

The earnings are also expected to be dented by decline in the non-core income of the company, as well as generic reasons such as economic slowdown and implementation of new tax regime under the budget 2020. Moreover, an increase in the effective tax rate will also play a substantial role in dragging down the company’s profits.

As stated earlier, some analysts have projected the company’s after tax earnings figure to follow an opposite trajectory during the quarter, purely on the back of reasons mentioned above.

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