Indus Motor Company Limited (INDU) held its analyst briefing today to discuss the results for FY25 and provide an outlook for the future. Here are the key highlights: The company reported a topline of PKR 215 billion for FY25, compared to PKR 152 billion in FY24, marking an increase of 41% year-on-year (YoY). This growth was driven by a surge in sales volume, which increased to 33,757 units in FY25 from 21,063 units in the same period last year, representing a 60% YoY increase.
– Gross margins for FY25 improved significantly, reaching 14.5% compared to 12.7% in the previous year, primarily due to the stability of the local currency, higher localization, and cost reduction measures implemented by management. Additionally, the performance of the Pakistani Rupee against the Japanese Yen remained strong during this period.
– Earnings for FY25 amounted to PKR 23 billion, up from PKR 15 billion in the previous year, reflecting a 53% YoY increase due to the factors mentioned above.
– Management anticipates a partial slowdown in the auto industry as a result of ongoing flooding, which has reduced consumer purchasing power in the affected areas. Furthermore, the recent floods have disrupted the supply chain due to damaged infrastructure.
– Management recommends that the State Bank of Pakistan (SBP) increase the PKR 3.0 million financing cap to take full advantage of declining financing rates.
– The company reported that 42,125 used vehicles were imported during FY25, up from 38,561 units in the previous year.
– Currently, the company is in discussions with its global partner regarding the introduction of new models. However, due to uncertainties surrounding the National Tariff Policy and potential reductions in Additional Customs Duty (ACD) and Regulatory Duty (RD), management has informed the government that the duty gap between Completely Knocked Down (CKD) kits and Completely Built Units (CBUs) could jeopardize local operations, potentially leading to a strategy shift towards importing fully built CBUs.
– Regarding the upcoming New Electric Vehicle (NEV) policy, management indicated that the company plans to participate by launching newer variants and will benefit from incentives offered on hybrid vehicles, plug-in hybrid electric vehicles (PHEVs), and electric vehicles (EVs).
– Additionally, if the permissible age limit for used cars is extended from three to five years and duties are reduced, the company may consider entering the market for the commercial import and sale of used vehicles. However, such measures could lead to significant job losses across the industry and negatively impact future investment activity.
– Management believes that the entrance of new competitors is beneficial for the market. Despite the increase in original equipment manufacturers (OEMs), the company managed to grow its market share during FY25.
– It was also noted that the Cross model has received a warm reception and currently holds a leading position in its segment.
– In terms of sales mix, the Yaris continues to dominate with approximately a 70% share, while the Corolla and Cross collectively account for the remaining 30%.
– The localization levels for the Corolla, Yaris, and Cross range between 60% and 65%, whereas the localization level for the IMV segment remains below 50%.
– The company’s sales are evenly split between rural and urban markets, with each segment contributing roughly 50%.
– We maintain our ‘BUY’ stance with a target price of PKR 3,585 per share for June 2026 due to: i) high localization reducing exposure to potential currency devaluation, ii) first-mover advantage in the hybrid electric vehicle segment, and iii) a strong presence in rural areas.
Source: AKD Research
