Inside Financial Markets

Indus Motor 1st Quarter Year 2016 Result Preview

INDU announced 1QFY16 earnings of PkR2.93bn (EPS: PkR37.33), up by a massive 160%YoY from NPAT of PkR1.13bn (EPS: PkR14.34) in 1QFY15, profits clocking in above our estimated NPAT of PkR2.74bn (EPS: PkR34.93).

Results were accompanied with interim cash dividend of PkR20/share, inline with our estimates.

Increase in earnings was primarily on the back of (i) 44%YoY topline growth to PkR28.9bn with unit sales up 67%YoY, (ii) GM expansion by a massive 7ppt YoY to 16.9% on weaker int’l steel prices coupled with favorable currency dynamics and (iii) 47%YoY reduction in distribution expenses. On a sequential basis, profits were up 9%QoQ (pre-tax basis: -9%QoQ) where seasonal dip in unit sales was compensated by a 50bps uptick in GMs.

INDU has gained 31%CYTD to trade at a FY16F P/E of 10.4x. In this regard, while outlook for volumes is strong and valuations remain un-stretched given cyclicals are justifiably trading at a premium in the current macro environment, we flag risks emanating from (i) any reversal in GMs trend, (ii) limited spare capacity and (iii) potential competition from HCAR when it launches the next generation Civic. While the stock has hit its upper circuit in the aftermath of result announcement, we retain a selective preference for PSMC and HCAR.

INDU Result Review



1QFY16 1QFY15 YoY 4QFY15 QoQ
Net sales            24,858       17,277 44%       28,342 -12%
COGS            20,664       15,586 33%       23,697 -13%
Gross profit              4,193         1,692 148%         4,646 -10%
Dist Exp                 216            412 -47%              67 225%
Admin Exp                 189            178 6%            217 -13%
Other opex                     5                5 -8%            425 -99%
Operating Profit              3,783         1,096 245%         3,937 -4%
Other income                 798            636 26%            760 5%
Finance costs                   20              12 59%              11 87%
WPP & WWF                 315            123 157% N.M.
PBT              4,247         1,597 166%         4,686 -9%
Tax              1,312            470 179%         1,998 -34%
PAT              2,934         1,127 160%         2,688 9%
EPS(PkR)              37.33         14.34 34.20
DPS(PkR)              20.00              –         40.00
Source: Company Accounts

By: InterMarket Securities Limited

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

The Canadian Securities Institute


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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)