AKD Research discussed the latest results from Indus Motor Company Limited (INDU), noting that the earnings were propelled by volumetric growth. Earlier today, INDU announced its financial results, reporting a Profit After Tax (PAT) of PKR 6.5 billion (Earnings Per Share or EPS of PKR 82.1) compared to PKR 5.7 billion (EPS of PKR 72.1) in the same period last year, marking a 14% year-on-year increase primarily due to higher sales volume. However, the results fell short of our expectations due to lower-than-anticipated gross margins. Additionally, the company declared a final cash dividend of PKR 50.0 per share, bringing the total payout for the year to PKR 176 per share.
Key highlights include:
– The company’s revenue reached PKR 69.6 billion, up from PKR 54.2 billion in the same period last year, representing a 28% year-on-year increase. This surge was largely driven by a 67% year-on-year increase in sales volumes, totaling 11,775 units compared to 7,069 units in the previous year. The increase was attributed to higher sales of the Yaris following its facelift launch and boosted IMV sales.
– Gross margins for the quarter were 13.3%, down from 14.2% in the same period last year. We believe this decline in margins is due to a shift in the sales mix towards Yaris from the Corolla Cross. Additionally, prices for the Corolla Cross were reduced by 3% year-on-year due to promotional offers.
– Operating expenses plummeted by 29% year-on-year, primarily due to lower warranty claims and reduced promotional expenses.
– Other income saw a 6% year-on-year decline, totaling PKR 4.0 billion compared to PKR 4.2 billion in the same period last year, driven by decreasing interest rates.
– The final cash dividend of PKR 50.0 per share aligns with the historical payout ratio of 60%. Thus, the total dividend for FY25 amounts to PKR 176.0 per share.
– Earnings for FY25 reached PKR 23 billion (EPS: PKR 292.7), compared to PKR 15 billion (EPS: PKR 191.8), reflecting a 53% year-on-year increase.
– We maintain a buy call on the stock, with a target price of PKR 3,585 per share for June 2026. Our positive outlook is based on: i) high localization, which lowers exposure to potential currency devaluation, ii) first-mover advantage in the HEV segment, and iii) an extensive nationwide dealership network.
https://research.akdsl.com/638920609235767838.pdf
Courtesy – AKD Research
