Indus profit declines 16pc

Karachi, August 27, 2019: Indus Motor Company Limited (IMC) posted 16 percent YoY decline in its 4QFY19 earnings, reporting EPS of Rs43.9 which is above our expectations mainly due to lower effective tax rate charged in 4QFY19.

Company has also declared DPS of Rs27.50/share in addition to DPS of PKR87.50/share already paid during the year, taking total  DPS of FY19 up to Rs115/share.

The significant decline recorded in earnings is due to depletion in gross margin by 7ppts owing to US$ appreciation against rupee by 14 percent in 4QFY19 and inflationary environment.

In 4QFY19, revenues declined by 4 percent QoQ mainly on back of lower volumetric sales 15,833 units vs. 16,935 units in 3QFY19. Sales have been impacted negatively due to continuous hike in prices (5-20 percent) in 4QFY19.

Effective tax rate is down by 13 points to 17 percent vs. 30 percent in previous quarter, we await for clarity from the management on this front.

Key risks to company includes Further PKR depreciation, slowdown in economy and Adverse regulatory changes.

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