Indus Motor Company Limited (INDU)

Dear Clients,

Indus Motor Company Limited (INDU) held its briefing session today to discuss its financial performance of 3QFY21 and provide an outlook on the operations of the company. To recall, INDU had reported a PAT of PKR 3.6bn (EPS: PKR 45.98, up by 35% YoY) in 3QFY21 as against PAT of PKR 2.7bn (EPS: PKR 34.09) in SPLY.

Key takeaways

– INDU has sold 16,531 vehicles and 105 CBU units in 3QFY21. Sales were higher by 49% YoY as pent up demand and low interest rate helped revive sales.

– Launch of Yaris was a highlight compared to the last quarter where it was absent. The launch has gained traction helping the company bank additional volumes as well.

– Revenues for the period stood at PKR 51.5bn compared to PKR 33.1bn last year. The 56% YoY upsurge in revenues is attributable to 2.3x YoY increase in Fortuner sales as well as Toyota Yaris launch.

– The company has witnessed an overwhelming response to Corolla Altis X so far. The company sold 4,828 units of Corolla Altis during the period.

– On the cost front, the company was impacted by port congestions leading to supply chain challenges. However, the company has managed the same to ensure shorter lead times.

– The cost of raw materials have also increased over the period such as steel, plastics, copper and others. The margins were impacted due to absorption of these costs. The company saw gross margins at 9.2% lower by 291bps compared to the same period last year.

– Over the 9MFY21, market share of Toyota increased to 23.5% as against 21.1% last year. Market leader in terms of volumes was Pak Suzuki Motor Company (PSMC) with 36.2% share followed by Honda Atlas Car (HCAR) with a market share

– We have an Outperform rating on INDU. The stock is currently trading at one year forward P/E of 5.6x.

Regards,
KASB Research

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