Karachi, September 14, 2021 (PPI-OT): INDU – FY21 Analyst Briefing Takeaways
Indus Motor Company (INDU) held its corporate briefing session today to discuss FY21 financial performance and future outlook. To recall, the company posted NPAT of PkR12.83bn (EPS: PkR163.21) in FY21 in contrast to NPAT of PkR5.08bn (EPS: PkR64.66) in FY20.
Total unit sales of INDU registered a growth of 100% in FY21, clocking in at 57,731 units (vs 28,837 units in FY20). The management expects the demand to remain robust amidst low interest rate environment, rising farmers’ income and a general increase in domestic travel on the back of existing international travel restrictions. When asked about the breakup of region wise sales, the share of rural and urban sales is 50-50. Around 32% of the sales are made through auto financing.
The company recently announced its plans to invest $100mn in their plant at Port Qasim over the period of next 3-years for the production of Pakistan’s first Hybrid Electric Vehicle (HEV). Although the management did not reveal the model to be launched, we expect the next generation of Corolla to be propelled in the hybrid variant.
Regarding the global shortage of semi-conductor chips, the management expects to fulfill ~90% of its demand in FY22 despite the supply constraints as they have substantial negotiating ability. The company is currently operating on double shift and overtime to fulfill the growing demand.
The management expressed their concern about GoP’s price control interventions. With rising raw material prices, higher freight charges, and declining PkR-US$ parity coupled with declining ability to pass-on the costs, we can expect the margins to squeeze in upcoming quarters. Apart from this, rising competition in local industry has hampered the pricing power.
The management also expressed their concern on port congestions around the world due to which the delivery of raw materials gets delayed by 15-20 days. Hence, the company resorts to air freight, which is costlier than sea freight, so that there is no hindrance in the production process.