While Indus Motors was Reeling from the double whammy of COVID19 induced slowdown and Higher Cost of the Cars, Launch of Toyota Yaris came to rescue the Automotive giant in Pakistan. While flagship Toyota Corolla still managed to sale decent level of volumes, It was Toyota Yaris Sales which provided Indus Motors with much-needed support.
Indus Motor Company announce its Quarterly result of September-2020 where it posted Net Profit of PKR 1.845billion (EPS:23.48) as compared to PKR 1.6 billion (EPS:16.8) in the same quarter last year. The company also announced a dividend of PKR 12/Share.
The company’s revenues increased by 65% YoY In 1QFY21, mainly attributable to 74% YoY rise in unit sales. The demand for new cars returned strongly as lockdown was lifted following decline in COVID-19 cases and lower interest rates.
Indus Motor’s gross margins dropped from 9.7% in 1QFY20 to 6.7% in 1QFY21. The drop in margins can be attributed to USD/PKR and JPY/PKR devaluation, relatively lower price increase in percentage terms and possible supply chain disruptions.
| PKR in Million | 1QFY21 | 1QFY20 |
| Net Sales | 34,195 | 20,716 |
| Gross profit | 2,288 | 2,008 |
| Operating profit | 1,746 | 1,284 |
| Finance costs | 34 | 19 |
| Taxation | 800 | 461 |
| NPAT | 1,845 | 1,319 |
| Earnings Per Share -PKR | 23.48 | 16.78 |
| Dividend Per Share-PKR | 12 | 7 |
Outlook
Although the economy is still in recovery phase and Economic growth remains an uncertain phenomenon, the recovery in Car Sales, as reflective in PAMA data, is gradually rising.
The Months of November/December have historically seen lower sales volumes compared to other months due to “New Model Year Phenomenon”.
However, a 625bps cut in policy rate would encourage demand via auto-financing while the new Yaris could generate additional sales for the company due to its new vehicle novelty factor and by directly competing with Honda City.
However, we believe that the growth in demand would be restricted due to high prices while a decline in interest rates would limit other income.
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