Indus Motor Company Limited (INDU) announced its FY21 result today, the company reported earnings of PKR 12.8Bn (EPS: PKR 163.2) compared to earnings of PKR 5.1Bn (EPS: PKR 64.7) in FY20, up 152% YoY. The earnings for 4QFY21 clocked-in at PKR 4.4Bn (EPS: PKR 56.1), up 45x/22% YoY/QoQ. The last quarter result was above expectation in terms of gross margins. Despite lower volumetric sales (↓12% QoQ), the company improved its margins, which we believe is mainly on account of excellent supply chain management of inventory amid global semi conductor chip shortage and soaring commodity prices. Key highlights of the result are summarized: –

INDU reported revenue of PKR 179.2Bn (↑108% YoY) in FY21, owing to higher volumetric sales at 57,236 units (↑102% YoY). The topline in 4QFY21, was reported at PKR 48.0Bn (↑4.6x/↓7% YoY/QoQ) due to change in sales volume (↑4.7x/↓12% YoY/QoQ) and higher prices.

The gross margins rose to 9.3% in FY21, compared to 8.6% in the preceding year. Despite higher unit sales (↑102% YoY), the gross margin only managed to increase by 0.6%. This was due to higher commodity prices, global shipping delays and semi conductor shortage. On the other hand, gross margins in 4QFY21 improved dramatically by 15.4/3.1 ppts YoY/QoQ to 12.3%. The company timely anticipated the impact of the global supply chain disruption and managed its inventory effectively.

The distribution expense was reported at PKR 1.6Bn (↑10% YoY) in FY21. The same in 4QFY21, witnessed higher delta to close at PKR 653Mn (↑181/66% YoY/QoQ).

Other income rose 74% to PKR 5.6Bn in FY21. The other income in 4QFY21, almost doubled QoQ to PKR 1.7Bn, while only rising 17% YoY.

Courtesy – BMA Capital Management Ltd.