Indus Motor profit falls 75%

Net sales declined to Rs37.2 billion during the first quarter of FY23

KARACHI:

The Indus Motor Company (INDU) has announced a substantial drop of 75% in their net profits during the first quarter ended September, 2022.

According to the financial result announced on Thursday, the car manufacturer posted profit after tax (PAT) of around Rs1.3 billion, which is abysmally low against Rs5.4 billion in the corresponding quarter of 2021. Earnings per share (EPS) for the quarter under review clocked in at Rs16.5 against EPS Rs69.0 in the same period of last year.

Insight Securities Auto Analyst Asad Ali said, “ The results are lower than the industry expected; a major deviation came from gross loss.”

“On sequential basis, earn- ings increased by 76% due to the absence of a 10% super tax,” he said, explained that “the company’s effective tax rate was recorded at 88% in the fourth quarter of the financial year (FY) 2022, which eroded the bottom line.”

Ismail Iqbal Securities Auto Analyst Muhammad Saad Imran observed that “Along with the result, the company has also announced an interim cash dividend of Rs8.2 per share.”

Deputy Head of Research at Topline Securities, Sunny Kumar stated that, “Net sales for INDU declined to Rs37.2 billion during the first quarter of FY23, down by 43% year-on-year, due to lower volumetric sales by 52% year-on-year, amid higher car prices and lower production.”

“The company recorded gross loss of Rs2.3 billion in the first quarter of FY23, which is attributable primarily to the abrupt movement of the Pakistan rupee against the US dollar and a ban on the import of completely built units (CBU) which has resulted in lower trading margins and lower volumetric sales causing lower fixed cost absorption,” observed Ali. He added that “The car maker’s revenues declined by 43% year-on-year and 48% quarter-on-quarter during the first quarter of FY23, mainly due to a decline in volumetric sales amid supply constraints.”