Market observers expect the Honda Atlas Cars Limited (HCAR) to record net sales of Rs 10.6 billion, showcasing a massive growth of 77 percent year over year (YoY) with the company slated to announce its first quarter results on July 26. “Such massive growth in net sales estimates is attributed to the overwhelming response of the new models of the City 1.5L and Civic which have boosted the company’s sales volume by 57 percent YoY in the first quarter of its financial year 2014,” InvesCap Research’s Abdul Azeem said. The five percent YoY increase in sale prices of cars and the 15 percent YoY depreciation of the Japanese Yen against the Rupee have improved the gross margins of the company, he added. Furthermore, he said that the operating costs are expected to increase by 61 percent YoY to Rs131 million while financial costs due to repayment of long term loans are set to fall. After accounting for the 403 percent increase in other income to a staggering Rs 63 million, the net profit of the company is estimated to reach at Rs 254 million in contrast to the loss of Rs 221 million (LPS Rs1.55) during the corresponding period the previous year, Azeem said. Moreover, led by an improved performance on the sales volume front, net margins are also expected to reach two percent in 1Q from a negative four percent the previous year. Expectation of dividend payout along with the results however, remains muted. On a quarterly basis the net profit of the company is expected to rise by nine percent QoQ as the depreciation in the Yen against the Rupee is likely to reduce the import cost of its basic materials, thus improving the gross margins of the company. During the period under review the volumetric unit sales of the company increased by a massive 57 percent YoY to 6,484 units. The company sold 3,108 units of Civic (153 percent YoY) and 3,371 units of City (17 percent YoY). Moreover, a decline in interest rates; the depreciation of the Yen and the ban on the import of cars exceeding three years of age will further support the company’s sales volume.
