Indus Motor FY25 earnings fall short of expectations despite strong sales growth

KARACHI: Indus Motor Company (INDU) announced its financial results for FY25 on Friday, reporting a profit of Rs23 billion, translating into earnings per share (EPS) of Rs292.74, up 48 percent year-on-year.

However, the result came in slightly below market expectations, according to a research note issued by Topline Securities.

During the fourth quarter of FY25, the company posted earnings of Rs6.4 billion (EPS of Rs81.88) compared to Rs5.7 billion (EPS of Rs72.08) in the same period last year, showing a 14 percent increase year-on-year but a 2 percent decline quarter-on-quarter.

The lower-than-expected performance was attributed to weaker gross margins.

The company also announced a final cash dividend of Rs50 per share, taking its full-year payout to Rs176 per share.

Sales and margins

Gross margins for 4QFY25 stood at 13.3 percent, down from 14.2 percent in 4QFY24 and 16.9 percent in 3QFY25. The decline was reportedly due to a higher sales mix of Corolla, Yaris, and Corolla Cross models compared to the Fortuner and Hilux. A growing consumer preference for Chinese pickups and SUVs also impacted Fortuner and Hilux sales, the report added.

On a yearly basis, gross margins improved to 14.5 percent, compared to 12.7 percent in FY24.

Net sales surged 28 percent year-on-year and 15 percent quarter-on-quarter to Rs69.6 billion in 4QFY25, supported by a 67 percent rise in unit sales to 11,775 vehicles. This compares with 9,077 units in 3QFY25 and 7,069 units in 4QFY24.

Other income and tax impact

Other income fell 6 percent year-on-year to Rs3.98 billion in 4QFY25 but jumped 42 percent quarter-on-quarter. For the full year, other income reached Rs14.95 billion, up 9 percent from FY24.

The effective tax rate stood at 38 percent in 4QFY25, compared with 39 percent in 3QFY25 and 32 percent in 4QFY24. On an annual basis, the effective tax rate rose to 39 percent, up from 35 percent in the previous year.

Customer advances also hit a 10-quarter high of Rs34 billion, according to the Topline report.

INDU is currently trading at forward price-to-earnings ratios of 6.5x for FY26E and 5.9x for FY27F, with an expected dividend yield of 9-10 percent.

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