Karachi, February 13, 2023 (PPI-OT): INDU: 2QFY23 Result Review

Indus Motors Company Limited (INDU) reported its 2QFY23 earnings earlier today, where it announced earnings of PkR1.3bn (EPS: PkR16.9) for the quarter, down by 72%YoY when compared to earnings of PkR4.75bn in SPLY while remaining flat on the QoQ basis. This takes cumulative earnings for the first half of the fiscal year to PkR2.6bn, a decline of 74%YoY owing to dismal gross margins posted in the half.

Net sales for the company have clocked in at PkR49.6bn, up by 33%QoQ owing to higher effective prices along with a 7% increase in offtakes (9,439 units sold) when compared to the previous quarter. When compared to the SPLY, revenue is down by 29%YoY as although effective selling prices are higher, volumes have shrunk to half of the 19,426 units sold in 2QFY22.

Gross margins have shown some recovery when compared to the last quarter but still remain in the negative territory, clocking in at -1.0% for the quarter as PkR devaluation along with high freight costs keep selling costs elevated. Gross margins for 1HFY23 have been recorded at -3.3% while clocking in at 9.1% for the SPLY.

INDU has posted Other Income of PkR3.5bn in the quarter, higher by 38%YoY owing to higher rate of return on ST investments, while dropping by 33%QoQ as ST investments had declined to PkR99.6bn by the end of 1QFY23. Other Income has once again provided respite to earnings, recording at PkR44/sh and ~1.8x of the Profit Before Tax.

The company has announced a dividend of PkR10.2/sh for the quarter, with the payout ratio crossing the 50% mark for the first time since 4QFY21 to clock in at ~60%. This takes cumulative payout for the first half to PkR18.4/sh to post an annualized Dividend Yield of merely ~4.3%.