Karachi, October 26, 2021 (PPI-OT): INDU: 1QFY22 Result Review

Indus Motor Company Limited (INDU) announced its 1QFY22 NPAT of PkR5.4bn (EPS: PkR69.02), up 194%YoY and 23%QoQ.

The topline swelled by 92%YoY/37%QoQ owing to 59%YoY/28%QoQ increase in volumes where the reductions in prices in light of budgetary measures has stimulated the demand.

The gross margin of the company normalized to 10.8% vs 12.3% in 4QFY21 owing to currency devaluation of 6.7%QoQ and increase in CRC/HRC prices by 5.1/1.8%QoQ.

The contribution from other income inflated by 88%YoY/21%QoQ, translating into PkR18.5/sh after tax, attributed to gigantic cash and ST investment reserve of PkR84bn as of 4QFY21.

Although we expect a gradual slowdown industrywide in later half of FY22 owing to monetary tightening, we expect INDU to sail freely on account of mounting farmers’ income and inadequate competition in sedan segment, reiterating our Buy stance (TP: PkR1,587/sh).