Indus Motor Company (INDU) announced its results for the second quarter of fiscal year 2026 (2QFY26) today, reporting a profit of Rs 5.98 billion, which translates to an earnings per share (EPS) of Rs 76.11. This marks a 23% increase compared to the same quarter last year and aligns with industry expectations.

For the first half of fiscal year 2026 (1HFY26), earnings reached Rs 12.7 billion, with an EPS of Rs 161.60, reflecting a 28% increase year-over-year, compared to a profit of Rs 9.96 billion (EPS of Rs 126.68) in 1HFY25.

Additionally, INDU announced an interim cash dividend of Rs 46 per share, bringing the total dividend for 1HFY26 to Rs 97 per share, resulting in a payout ratio of 60%.

Gross margins for 2QFY26 stood at 13.1%, which is lower than expected, down from 14.1% in 2QFY25 and 13.4% in 1QFY26. This decline is likely attributed to an increase in sales of the Corolla, Yaris, and Cross variants compared to the Fortuner and Hilux on a quarter-over-quarter basis. It is noteworthy that sales of the Fortuner and Hilux dropped by 30% QoQ, potentially due to heightened competition from newly launched Chinese pickups and SUVs.

In 1HFY26, gross margins improved to 15.2%, compared to 13.8% in 1HFY25.

Net sales of the company increased by 33% year-over-year, totalling Rs 57.5 billion in 2QFY26, although this represents a 7% decrease quarter-over-quarter. The year-over-year increase was driven by a 67% rise in units sold, to 10,674 in 2QFY26, from 6,381 in 2QFY25.

Other income rose by 43% year-over-year and 83% quarter-over-quarter, amounting to Rs 5.3 billion in 2QFY26. Notably, cash and cash equivalents remained stable at Rs 100 billion in the December 2025 quarter.

The effective tax rate for 2QFY26 was 43%, compared with 40% in 2QFY25 and 38% in 1QFY26. For 1HFY26, the effective tax rate was 41%, up from 39% in 1HFY25.

Currently, INDU trades at a price-to-earnings (P/E) ratio of 5.7x for FY26E and 5.2x for FY27F, with dividend yields of 10% for FY26E and 11% for FY27F.