Earning Preview: Its INDU’s turn to suffer

August 26, 2019 (MLN): Indus Motors Company Limited (INDU) is scheduled to release its financial results for the year ended June 30, 2019, on Tuesday. In consonance with the projections set by spectators, the company’s net earnings are expected to decline by approximately 20%,

The decline in earnings can be accorded to lower sales revenue earned during the period, owing to drop in unit sales due to continuous price hiking. It is worthwhile to note that while the sale of Corolla variant strongly stood its ground during the said period, the sale of Fortuner and Hilux failed to endure mounting pressure and ultimately crumbled.

The increase cost of goods sold might also play a meaty role in the company’s jeer worthy performance, all thanks to persistent Rupee devaluation. The sad part is that INDU has a very limited pricing power at the moment, which means it cannot roll over the impact of further PKR devaluation onto its customers.

INDU is, and continues to be a strong player amongst its peers. However, given the ongoing economic slowdown, increase in Federal Excise Duty, swelling inflation along with other economic factors, the future outlook of the company seems gloomy.

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