BMA Auto universe is expected to showcase an improvement in profitability to PKR 5.4Bn (↑ 4.8x/1.5x, YoY/QoQ) for the quarter ended Dec’ 20, primarily on account of higher unit sales of PC, SUV, LCV and Tractor (↑ 39%/11%, YoY/QoQ), Rupee appreciation (↓ 3.5% QoQ) and higher car prices compared to Sep’20 quarter.

Company wise, Indus Motors (INDU), Millat Tractors (MTL) and Pak Suzuki Motor Company (PSMC) are expected to post an EPS of PKR 36.1/27.6/4.3 per share respectively in Dec’20. Further, we expect INDU and MTL to announce dividends of PKR 18/48 per share, respectively.

INDU to report strong earning in 2QFY21: The company is expected to post a PAT of PKR 2,839Mn (EPS: PKR 36.1) during 2QFY21, ↑2.9x/1.5x YoY/QoQ. Consequently, profitability during 1HFY21E is estimated to reach PKR 4,684Mn (EPS: PKR 59.6), ↑2x YoY. Increase in profitability is estimated to be driven by volumetric growth in unit sales of all Toyota vehicles by 93%/23% YoY/QoQ to 14,424 units in 2QFY21. Due to the surge in profits, INDU is expected to announce a DPS of PKR 18/sh.

MTL earnings to remain upbeat on the back of higher tractor sales:

Millat Tractors Ltd is likely to report PAT of PKR 1,377Mn (EPS: PKR 27.6), up 3x/1.2x YoY/QoQ in 2QFY21. This takes the 1HFY21E earnings to PKR 2,512Mn, up 3.1x YoY. The continued profitability was mainly on account of rise in sales by 89%/15%, YoY/QoQ to 8,313 units. Moreover, we expect the management to announce a dividend of PKR 48/sh.

PSMC Dec’20 earnings to finally land in the green zone after two years:

Pak Suzuki Motors Company Ltd is expected to post positive earnings in Dec’20 with PAT of PKR 357Mn (EPS of PKR 4.3), a complete turnaround from negative earnings in the prior year and quarter. The CY20 earnings will however remain negative with a LAT of PKR 2,239Mn (LPS: PKR 27.2). Improvement in earnings will mainly be on the back of higher unit sales ↑17% QoQ to 20,451 and PKR appreciation in 4QCY20.

BMA Capital Management Ltd.