Indus Motor Company Limited (INDU) - March 2023

Indus Motor Company Limited (INDU) – March 2023

Research Team

Table of Contents

Corporate Briefing Notes

The management of Indus Motor Company Limited (INDU) held its corporate briefing session to discuss the financial results for 1HFY23 and its future outlook.

Key Highlights

● Management informed that the automobile sector is currently facing unforeseen external challenges due to the significant PKR devaluation and import restrictions imposed by SBP. Moreover, the demand has declined due to the prevailing economic downturn, which includes higher interest rates, elevated production costs and increased taxes & duties on the vehicles.
● Net sales in 1HFY23 declined by 36% YoY to PKR86.83bn compared to PKR135bn in SPLY. Similarly, profitability of the company also down by 74.3% YoY to PKR2.6bn in 1HFY23 against PKR10.18bn in SPLY.
● Management reported that the company had to observe frequent shutdowns during the period due to imports restrictions by SBP, resulting in lower production. It is noteworthy that the sales volume of CKD units went down by 52% YoY.
● The Company has declared an interim cash dividend of PKR 10.2 per share for 2QFY23.
● Gross margins of the company dropped to -3.3% in 1HFY23 from 9.1% during the SPLY, mainly due to higher input costs amid PKR depreciation and skyrocketed commodity prices. The company has been unable to pass on the full impact to consumers due to low purchasing power.
● During the period, the company’s short-term investments decreased due to reduction in advances from customers.
● Regarding investment plan of US$100mn for local production of HEV vehicles, the management informed that it is on track and is expected to launch its variant by end of the next year.

Future Outlook

● Going forward, restrictions on CKD imports by State Bank of Pakistan, volatility of PKR against US Dollar, high inflation, tight fiscal and monetary measures by government will continue to impact the industry volumes and the future earnings of the Company.
● Moreover, the company has recommended the government to suspend the payments to customers due to delayed delivery, which is set at KIBOR+3%.

Important Disclosures


This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.

Analyst certification:

The research analyst for this report, certifies that 1.all of the views expressed in this report accurately reflect her personal views about the subject and part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.

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