INDU: Unbeatable

April 29, 2021 (MLN): Indus Motor Company Limited (INDU) has posted a 68.8% YoY increase in net profits for 9MFY21 to Rs8.4bn (EPS: Rs107.07) as against the profits of Rs4.98bn (EPS: Rs63.4) in the corresponding period last year.

In conjunction with the results, the company also announced a cash dividend of Rs67 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.

The sales volumes improved in all segments, mainly due to pent-up demand after lockdown and lower interest rates during the period under review. The Company also experienced an overwhelming response to Toyota Yaris in the first, as well as the second quarter of the fiscal year 2020-21 which contributed to the increase in volume in the Passenger Car segment. Moreover, the Fortuner TRD variant was launched in October 2020 which was also well received by customers.

Accordingly, the topline of the company jumped by 73% YoY, mainly due to revival in economic activities post lockdown and lower base case. The gross profitability of the company surged by 38.3% YoY on the back of growth in volumetric sales.

However, the increase in the cost of sales by 77% YoY mainly due to a rise in international steel prices and higher freight which minimized the impact of Rupee appreciation, has resulted in a reduction in gross profit margin to 8% against 10% in the same period last year.

On the expense side, INDU’s Distribution expenses shrank by 21.8% YoY despite higher sales, Admin cost, however, was up by 3% YoY.

Among other line items, the Other income of the company increased notably by 66.5% YoY from Rs2.3bn to Rs3.89bn, amidst an increase in cash balance owing to higher sales and short-term investments. The effective tax rate has improved to 29% as compared to 30% in 9MFY20.

Overall, INDU has posted strong results. With the continued overall improvement in the economy (both urban and rural) likely to be sustained, demand for premium segment cars is likely to remain robust, a report by Intermarket Securities (IMS) said. Moreover, the rise in auto financing (through the recently proposed Roshan Apni Car Program by the SBP) and the launch of new models can be additional triggers. However, the tightening of restrictions amid rising Covid-19 cases is a key threat to sales and profitability of the company, it added.

 

Financial Results for the nine months ended March 31, 2021 ('000 Rupees)

 

Mar-21

Mar-20

% Change

Net sales

                        131,159,717

                 75,830,354

72.96%

Cost of sales

                        120,402,059

                 68,054,877

76.92%

Gross profit

                          10,757,658

                    7,775,477

38.35%

Distribution expenses

                                966,101

                    1,236,590

-21.87%

Administrative expenses

                             1,062,672

                    1,032,047

2.97%

Other operating expenses

                                   14,984

                       143,611

-89.57%

Workers' Profit Participation Fund and Workers' Welfare Fund

                                700,590

                       545,500

28.43%

Other income

                             3,892,941

                    2,337,269

66.56%

Finance cost

                                   79,533

                          54,238

46.64%

Profit before taxation

                          11,826,719

                    7,100,760

66.56%

Taxation

                             3,411,259

                    2,117,035

61.13%

Profit after taxation

                             8,415,460

                    4,983,725

68.86%

Earnings per share – basic and diluted (Rupees)

                                   107.07

                            63.41

68.85%

 

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Posted on: 2021-04-29T10:50:00+05:00

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