Business & Finance Print edition: 2026-10-16

1QFY27: Auto sector profits seen falling 35pc QoQ

Published October 16, 2026 Updated October 16, 2026 06:37am

2 min

By Muhammad Saqib

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KARACHI: Pakistan’s listed automobile sector is expected to post combined earnings of Rs12.6 billion in 1QFY27, down 35 percent quarter-on-quarter, as vehicle sales volumes declined 16 percent sequentially amid uncertainty over the auto policy and delayed clarity on general sales tax (GST) on hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs), according to a research report.

The research house expects earnings of the auto sector to increase 1 percent year-on-year from Rs12.5 billion in 1QFY26. Net sales are projected to rise 39 percent year-on-year but decline 10 percent quarter-on-quarter to Rs179 billion in the period.

Vehicle sales volumes according to Topline Research stood at 26,688 units in 1QFY27, up 30 percent year-on-year but down 16 percent quarter-on-quarter. The annual increase was supported by Honda Atlas Cars (HCAR) and Indus Motor Company (INDU), whose sales volumes rose 52 percent and 34 percent, respectively.

On a sequential basis, volumes declined across the companies, except Indus Motor, which recorded a 17 percent increase.

The research house expects gross margins to average 16.4 percent in 1QFY27, compared with 19.5 percent in 1QFY26 and 16.7 percent in 4QFY26. The projected contraction is mainly attributed to Sazgar Engineering Works (SAZEW), which is absorbing the increase in GST on HEV and PHEV variants, according to takeaways from its annual general meeting and corporate briefing session.

Other income for the sector is projected to decline 33 percent quarter-on-quarter to Rs5.3 billion, following the absence of one-off gains from the SIDC settlement recorded in the previous quarter. The effective tax rate is expected to increase to around 37 percent in 1QFY27, compared with 35.5 percent in 1QFY26 and 34.8 percent in 4QFY26.

Indus Motor Company is expected to report earnings per share (EPS) of Rs87.6 in 1QFY27, up 2 percent year-on-year and 13 percent quarter-on-quarter. The company’s sales volumes increased to 13,261 units from 9,889 units in 1QFY26 and 11,333 units in 4QFY26.

Topline Research expects Indus Motor’s gross margin to improve to 13 percent from 10.3 percent in the previous quarter, following the normalisation of margins after one-off adjustments. The company is also expected to announce a cash dividend of Rs53 per share, representing a payout ratio of 60 percent.

Honda Atlas Cars is projected to post EPS of Rs5.8 in 2QMY27, up 11 percent year-on-year but down 67 percent quarter-on-quarter. The expected sequential decline is attributed mainly to lower other income following the absence of accounting gains from the SIDC settlement and a normalised effective tax rate.

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