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INDU_2QFY23 Result Review, (AKD Off the Analyst's Desk Feb 13, 2022)

AKD, Off the Analyst's Desk

INDU: 2QFY23 Result Review,

 

Indus Motors Company Limited (INDU) reported its 2QFY23 earnings earlier today, where it announced earnings of PkR1.3bn (EPS: PkR16.9) for the quarter, down by 72%YoY when compared to earnings of PkR4.75bn in SPLY while remaining flat on the QoQ basis. This takes cumulative earnings for the first half of the fiscal year to PkR2.6bn, a decline of 74%YoY owing to dismal gross margins posted in the half.

 

• Net sales for the company have clocked in at PkR49.6bn, up by 33%QoQ owing to higher effective prices along with a 7% increase in offtakes (9,439 units sold) when compared to the previous quarter. When compared to the SPLY, revenue is down by 29%YoY as although effective selling prices are higher, volumes have shrunk to half of the 19,426 units sold in 2QFY22.
• Gross margins have shown some recovery when compared to the last quarter but still remain in the negative territory, clocking in at -1.0% for the quarter as PkR devaluation along with high freight costs keep selling costs elevated. Gross margins for 1HFY23 have been recorded at -3.3% while clocking in at 9.1% for the SPLY.
• INDU has posted Other Income of PkR3.5bn in the quarter, higher by 38%YoY owing to higher rate of return on ST investments, while dropping by 33%QoQ as ST investments had declined to PkR99.6bn by the end of 1QFY23. Other Income has once again provided respite to earnings, recording at PkR44/sh and ~1.8x of the Profit Before Tax.
• The company has announced a dividend of PkR10.2/sh for the quarter, with the payout ratio crossing the 50% mark for the first time since 4QFY21 to clock in at ~60%. This takes cumulative payout for the first half to PkR18.4/sh to post an annualized Dividend Yield of merely ~4.3%.

 

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