Ayesha Mudassar

Indus Motor Company Limited's (INDU) gross profit, profit-before-tax (PBT) and profit-after-tax (PAT) shot up by 240%, 167.9% and 147.9%, respectively, in the first quarter of the current fiscal year 2023-24 (1QFY24) as compared to the corresponding period of FY23, reports WealthPK. The company earned PBT of Rs4.9 billion, PAT of Rs3.2 billion and earnings per share (EPS) of Rs40.91, respectively, in 1QFY24.

However, the revenue of the leading automobile assembly company in Pakistan dropped by 12.3% from Rs37.2 billion in 1QFY23 to Rs32.6 billion in 1QFY24. The PBT of Rs1.8 billion in 1QFY23 jumped by 167.9% in 1QFY24. INDU's PAT of Rs1.2 billion declared in 1QFY23 also soared to Rs3.2 billion.

Performance over last six years

The company's financial performance remained exceptional from 2018 to 2022. However, due to a decline in sales of vehicles, FY23 saw a major decline in profitability. The continuous depreciation of the rupee against the US dollar, and the rise in inflation were the factors affecting the company's financial performance.

Automotive industry of Pakistan during FY23

Throughout FY23, the automotive industry faced import compression measures, which were introduced to address the balance of payment crisis and promote local production. However, these restrictions on essential components created immense challenges for the manufacturing processes, leading to disruption in the vendor supply chain, frequent plant shutdowns, and underutilisation of the company's plant capacity. Devaluation, rising inflation, and stringent fiscal measures have driven car prices out of reach for millions. Potential buyers are experiencing unprecedented late delivery times and non-availability of desired car variants due to disruption in supplies. Moreover, the increased tax burden further constrained the sector's growth potential. The unstable political conditions further eroded consumer confidence, adding to the industry's challenges.

Principal activities of the company

Indus Motor Company was incorporated in Pakistan as a public limited company in December 1989. It started commercial production in May 1993. Registered on the Pakistan Stock Exchange (PSX) with the symbol "INDU", the company is the largest entity in the automobile assembler sector with a market capitalisation of Rs70.1 billion. The primary activities of the company include assembling, progressive manufacturing and marketing Toyota vehicles in Pakistan. With over 50 partner manufacturers contributing to the value chain by producing parts worth over Rs250 million each working day, the company has played a critical role in developing the local automotive ecosystem. A total of 53 independently owned authorised dealerships that offer after-sales support to consumers have also been established by the company, creating job opportunities for approximately 450,000 individuals in Pakistan, both directly and indirectly.

Credit: INP-WealthPk