Karachi: Indus Motor Company (INDU) reported a significant rise in its first-quarter earnings for the fiscal year 2026, posting an earnings per share (EPS) of Rs85.49, marking a 32% year-on-year increase and a 4% quarter-on-quarter growth. The results surpassed industry expectations, driven by higher-than-anticipated gross margins.
The company's gross margins stood at 17.1% in the first quarter of FY26, exceeding the projected 15%. This is a notable increase from 13.4% in the same quarter of the previous year and 13.3% in the fourth quarter of FY25. The margin improvement came despite a quarter-on-quarter decline in sales, the imposition of an electric vehicle adoption levy, and minor production delays.
Indus Motor declared a dividend of Rs51 per share for the first quarter, maintaining a payout ratio of 60%. The company's net sales rose by 48% year-on-year, reaching Rs61.74 billion, although they decreased by 11% compared to the previous quarter. This year-on-year growth was largely attributed to increased sales volumes.
Sales of Toyota variants saw a 61% year-on-year increase, totaling 9,889 units in the first quarter of FY26, compared to 6,160 units in the same period last year. However, there was a 16% quarter-on-quarter decline from 11,775 units in the fourth quarter of FY25.
Distribution expenses grew by 5% year-on-year but decreased by 13% quarter-on-quarter, reflecting the trend in volumetric sales. Administrative expenses rose by 46% year-on-year but fell by 33% from the previous quarter. Other expenses increased by 52% year-on-year, aligning with the trend in operating profit.
Other income experienced a decline of 35% year-on-year and 27% quarter-on-quarter to Rs2.9 billion, attributed to a decrease in cash and cash equivalents and lower interest rates. The effective tax rate stood at 39%, slightly higher than 38% in both the first quarter of FY25 and the fourth quarter of FY25.
Analysts from JS Global have maintained a "BUY" recommendation for Indus Motor, noting that the company is currently trading at an FY26E/FY27F price-to-earnings ratio of 5.7/5.2x.