Truck Sales Surge as Ghandhara Automobiles Eyes Earnings Turnaround

Karachi: Ghandhara Automobiles Limited (GAL), a prominent player in Pakistan’s truck manufacturing industry, is poised for a significant earnings turnaround. The company has been given a Buy rating by analysts, with a projected 47% upside to its discounted cash flow-based target price of Rs710.

GAL is expected to benefit from a potential recovery in Pakistan’s economic activity, spurred by an easing cycle that could boost demand for both commercial and consumer vehicles. A key element of this optimism is the anticipated success of GAL’s competitively priced pick-up truck, the JAC-T9 Hunter, which launched in January 2025. The introduction of this vehicle, coupled with increased demand for JAC trucks, is projected to drive a 50% year-over-year increase in earnings per share for the fiscal year 2026.

Additionally, the demand for commercial vehicles is expected to rise with the development of the Reko-Diq project, set to commence in calendar year 2028, and the second phase of the China-Pakistan Economic Corridor (CPEC). These projects present an upside risk to current demand estimates for GAL and its affiliate, GHNI, of which GAL owns 17.91%.

The stock is trading at a price-to-earnings ratio of 5x for the fiscal year 2026, making its valuation attractive compared to industry peers. However, there are risks associated with the potential impact of electric vehicles on demand and the inconsistency of government policies toward the auto sector. A 10% drop in JAC-T9 Hunter sales could result in an 8% to 12% downside risk to earnings per share for fiscal years 2026 and 2027, respectively.

The analysis, provided by JS Global, highlights the potential for GAL to capitalize on economic developments and strategic product launches, despite existing market challenges.