INDU: On upward trail

October 26, 2021 (MLN): Indus Motor Company Limited (INDU) managed to hold its growing momentum as the company kicked off the fiscal year 2022 by making splendid profits. During the 1QFY22, the bottom line of the company expanded by around 3x to stand at Rs5.42 billion, against Rs1.85bn in 1QFY21.

The massive profits are also reflected in the earnings per share as per which, the earning per share during the review period reached Rs69.02, compared to Rs23.48 in the same period last year (SPLY), as per the INDU’s financial statement for 1QFY22 revealed today.

In conjunction with the results, the company also announced a cash dividend of Rs34.5 per share for the period mentioned above.

The upsurge in INDU’s profitability was mainly attributable to higher sales volumes and an increase in other income, due to the improved cash fund position of the Company.

Going by the financial statement, the sales volume of the company jumped by around 92% YoY to clock in at Rs65.55bn due to enhancement of volumetric unit sales as 18,646 units were sold in 1QFY22 as compared to 11,715 units in 1QFY21. This was primarily owing to enhancement of economic activities, stable policy rate, favorable government policies, and incentives, a report by Darson Securities noted.  

Similarly, the cost of sales also went up by 83% YoY to stand at Rs58.48bn in 1QFY22 on the back of increasing commodity prices for steel, plastic, etc in the international market. In addition, the continuous depreciation of PKR against the USD also hit the cost of sales during the period.

However, the volumetric sales have omitted the impact of higher cost as the gross margin of the company improved to 10.79% YoY in 1QFY22 from 6.69% YoY in 1QFY21.

On the expense side, INDU’s Distribution expenses ballooned by 2x YoY on account of higher sales. Meanwhile, the admin cost jumped by 47.62% during the period under review.

Among other line items, the other income of the company increased notably by 88% YoY from Rs1.09bn to Rs2.05bn, amidst an increase in cash balance owing to higher sales and short-term investments. The effective tax rate has improved to 29.4% as compared to 30.25% in 1QFY21.

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