Indus Motor Company has requested the government to reduce FED on vehicles

The management of Indus Motor Company Limited (INDU) held a corporate briefing session on 25th May’22 to discuss 9MFY22’s financial results and future outlook.

 Brief Takeaways

  • To recall, the company posted a profit after tax of PKR 15,292mn in 9MFY22, depicting a massive jump of 82% YoY on the back of i) higher CKD and CBU sales volume, and ii) jump in other income amid higher fund size due to increase in customer advances.
  • Highlighting the company’s financial performance, management mentioned that during 9MFY22, the company’s sales volume increased by 33% YoY to 57,367 units as compared to 26,362 units in the same period last year (SPLY). 
  • On a quarterly basis, the company’s profitability climbed up owed to a volumetric increase tagged with higher car prices.
  • The management highlighted that booking/orders for the company’s new cars are not being accepted in the light of i) unstable PKR/USD parity, ii) unfavorable financing policy by the SBP, and iii) higher cost of consumer financing.
  • As per the management, consumer financing consists of 30%-33% of the total industry’s sales volume. Keeping the updated SBP tenure policy for consumer financing and higher interest rates in view, the car sales is expected to decline going forward.
  • Moreover, the management expects a massive hike in petrol and diesel prices shortly. With this the company expects demand for new and used cars to further decline.
  • Towards the end of Mar’22, the company launched two new variants of Toyota Hilux Revo Rocco and Toyota Fortuner Legender.
  • Since the new Auto Policy 2021-26 supports investments in new technologies, investment of around USD 100mn is being made for local Hybrid Electric Vehicles.
  • The management told that it has requested the government to reduce FED on vehicles and encourage local vendors for manufacturing high-tech parts locally.

Courtesy – AHL Research

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