Karachi, October 27, 2022 (PPI-OT): INDU: 1QFY23 Result Review

Indus Motor Company Limited (INDU) announced its 1QFY23 result today where it posted a NPAT of PkR1.3bn (EPS: PkR16.5), up by 155%QoQ owing to the Supertax applicable last quarter, while down 76%YoY. The result is well below industry expectations as the company has posted a gross loss for only the second time in its history.

The company recorded PkR37.2bn in revenue for the first quarter of the year, decreasing by 48%QoQ while also down 43%YoY, in line with our expectations. The low revenue is due to the curb on imports of CKD kits, which has caused offtakes to drop by 51%QoQ and 53%YoY.

Gross loss for 1QFY23 is PkR2.4bn on the back of dismal gross margins, clocking in at a whopping -6.3% for the quarter. We believe the margins have decreased this quarter on the back of high freight charges on inventory along with hefty currency devaluation.

The company has recorded Other Income of PkR5.2bn, remaining flat on a QoQ basis, due to strong holdings in ST investments and cash balances along with elevated interest rates. Other income was sufficient to turn an operating loss into a profit before tax, clocking in at nearly 4x the NPAT in this quarter.

Taxation for the quarter has clocked in at 29%, returning to normalcy after the imposition of Supertax last quarter.

The company announced final cash dividend of PkR8.2/sh, sustaining its healthy payout ratio at 50%.