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INDU & KTML - 2QFY24 Result Reviews, (AKD Off the Analyst's Desk Feb 22, 2024)

INDU - 2QFY24 Result review — Volume drop dampens earnings

Indus Motor Company Limited (INDU) announced its 2QFY24 results today where the company posted PAT of PkR1.7bn (EPS: PkR22.2) vs. PkR3.2bn (EPS: PkR40.9) in the preceding quarter, down 46%QoQ, primarily attributed to a decline in sales volumes.

• Topline clocked in at PkR18.2bn in 1QFY24, a decline of 44%/63% on quarterly and yearly basis, respectively. The said decline is majorly due to a dip in the sales volume, with the company selling only 2,687units compared to 4,511/9,439units in 1QFY24/SPLY (↓ 40%QoQ/72%YoY).
• Gross margins contracted to 7.8% from 10.1% in the previous quarter, possibly due to lower absorption of fixed costs amid low volumes, coupled with a decrease in ex-factory prices at the end of Oct’23.
• Operating expenses increased significantly by 45%QoQ despite low volumes, likely due to higher advertising and sales promotion expenditure associated with the launch of Corolla Cross. 
• Other income witnessed a decline of 12%QoQ to PKR2.5bn compared to PkR2.8bn in 1QFY24, due to fall in short-term investments during the previous quarter.
• Lastly, company announced a cash dividend of PkR13.2/sh, in line with the historical payout ratio of 60%, taking 1HFY24 dividend to PkR37.7/sh.

 

KTML: 2QFY24 Result Review — Consol. earnings surge on potential MLCL’s gains

 Kohinoor Textile Mills  Ltd. (KTML) announced its 2QFY24 financial result earlier today, where the company posted unconsolidated earnings of PkR364mn (EPS: PkR1.4) vs. PkR982mn (EPS: PkR3.6) in the preceding quarter, down 63%QoQ. The quarterly decline is primarily attributable to a contraction in gross margins amidst higher energy costs.

• Net sales clocked in at PkR13.6bn for 2QFY24 (↓6%QoQ/↑40%YoY). The said quarterly decline is possibly due to the unchanged sales volumes and rupee appreciation during the quarter.
• Gross margins contracted to 15.7% from 19.0% in the previous quarter, likely due to increased energy costs and a drop in end product prices.
• Finance costs increased to PkR869mn vs. PkR805mn in the previous quarter, up 7.9%QoQ, owing to increase in the total borrowings. To recall, company’s total debt rose to PkR17.5bn in Sept’23 accounts up from PkR14.6bn at Jun’23 closing.
• This brings half-year standalone earnings to PkR5.0/sh vs. PkR3.6/sh in SPLY, up 37%YoY.
• On a consolidated basis, earnings for the quarter clocked in at PkR3.6bn (EPS: PkR13.4) compared to PkR2.3bn (EPS: PkR8.7) in the preceding quarter, up 54.6%QoQ. The said rise is primarily due to a 2.6x increase in other income, possibly due to portfolio gains from MLCL.