Indus Motors Company Limited (INDU), one of the largest automobile manufacturers in Pakistan, Wednesday recently released its financial results for the third quarter of FY23.
The results show that the company has posted a Profit After Tax (PAT) of PKR 3,216mn (EPS: PKR 40.92), which is up by 142% QoQ.
The significant increase in profit on a sequential basis is primarily due to the improvement in gross margins, which rose by 730 basis points QoQ, resulting in an operating profit after two consecutive quarterly operating losses during FY23. Alongside the result, the company also declared an interim cash dividend of PKR 24.4/share.
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Despite the increase in profit, the company’s net sales declined to PKR 48.2bn during 3QFY23, down by 29% YoY, primarily due to lower volumetric sales (-60.6% YoY). The company faced additional challenges from massive inflationary pressures that adversely affected consumer purchasing power.
However, INDU was able to recover its gross margins, recording 6.3% during 3QFY23, as compared to -1% in 2QFY23. This was made possible by passing on the impact of currency depreciation to end customers through higher car prices.
The company’s other income portrayed a decline of 5% YoY in 3QFY23, mainly due to a decline in short-term investments, resulting in lower interest income.
The effective taxation of the company during 3QFY23 was booked at 33.5%, compared to 27.6% in SPLY.
INDU has been known for its resilience in the face of challenging market conditions. The company has made significant progress in improving its operational efficiency and cost management, which has resulted in improved profitability during the current year. Despite the challenging environment, the company has been able to maintain its market share in the industry.
The announcement of the interim cash dividend is a testament to the company’s financial strength and its commitment to providing value to its shareholders.
The management of INDU remains optimistic about the future, citing the recent improvements in macroeconomic indicators, such as the stabilization of the exchange rate and declining inflationary pressures. The company is expected to continue its efforts to enhance its product portfolio and expand its operations to capture a larger share of the domestic automobile market.
