Indus Motor Company Limited (INDU) announced its financial result today for 1HFY21, posting earnings of PKR 4,801mn (EPS: PKR 61.08), increasing by 108% YoY from PKR 2,304mn (EPS: PKR 29.32). While earnings in the quarter arrived at PKR 2,956mn (EPS: PKR 37.60), depicting a growth of 200% YoY and 60% QoQ. Along with the result, INDU also declared an interim cash dividend of PKR 25.00/share (1HFY21 37.00/share) vs. PKR 6.00/share (1HFY20 13.00/share) in 2QFY20.

Result Highlights

Net sales of the company increased by 85% YoY to PKR 79.6bn attributable to volumetric growth of 84% YoY to 26,139 units (Yaris 12,845 units, Corolla 8,427 units, Fortuner 1,247 units, Hilux 3,620 units) vs. 14,175 units (Corolla 11,742 units, Fortuner 552 units, Hilux 1,881 units) in 1HFY20. Revenue during 2QFY21 increased by 106% YoY to PKR 45.5bn. This is primarily owing to surge in sale of cars by 93% YoY during 2QFY21 (14,424 vs. 7,468 units).

Gross margins settled at 8.19% in the quarter, up by 22bps YoY due to PKR appreciation which wiped off the impact of higher steel prices together with change in sales mix from low margin car to high margin vehicles (Fortuners and Hilux sales increased by 200% and 103% YoY).

Other income increased by 157% YoY to PKR 1,368mn on account of significant jump in short term investment (government securities), and cash and bank balances.

Effective tax rate during 2QFY21 was set at 28.69% in contrast to 30.36% in 2QFY20.

·        Currently, we have a ‘BUY’ call on the stock with a Dec’21 target price of PKR 1,723/share.

 Courtesy – AHL Research