Karachi, April 26, 2023 (PPI-OT): INDU: 3QFY23 Result Review

Indus Motor Company Limited (INDU) reported its 3QFY23 earnings earlier today, where it announced earnings of PkR3.2bn (EPS: PkR 40.92) for the quarter down by 37%YoY when compared to earnings of PkR5.1bn in SPLY while up by 1.42x on QoQ basis, higher than our expectations. This takes cumulative earnings for the 9MFY23 of the fiscal year to PkR5.8bn, a decline of 62%YoY majorly attributable to low production amid restrictions on LCs.

Net sales for the company have clocked in at PkR48.2bn, down by 3%QoQ owing to higher effective prices which outweighed the decline in offtakes (3,356 units sold) down by 11%QoQ. When compared to the SPLY, revenue is down by 33.6%YoY as volumes have shrunk by 25%YoY to 9,598 units sold in 9MFY23.

Gross margins have shown impressive recovery in 3QFY23 clocking in at 6.3% on the back of higher effective selling prices during the quarter, which was the major reason behind INDU's earnings beating our expectations. Gross margins for 9MFY23 have been recorded at 0.1% while clocking in at 8.6% in the SPLY.

INDU has posted Other Income of PkR3.03bn in the quarter, down by 12%YoY owing to a decline in ST investments which offset the impact of higher rates, while dropping by 5%QoQ. To recall, ST investments have declined to ~PkR65bn by the end of 2QFY23.

INDU has posted operating profit of PkR1.9bn in 3QFY23 vs an operating loss of PkR1.4bn in 2QFY23. To note, operating margins posted at 4% during the quarter compared to 2.9% in 2QFY23

The company has announced a dividend of PkR24.4/sh for the quarter, representing a payout ratio 60% for the Quarter. This takes cumulative payout for 9MFY23 to PkR42.8/sh.