Success of Yaris model to boost Indus Motors profits, expect analysts

The arrival of new entrant Yaris model, is likely to boost the earnings of Indus Motors for the second quarter of the Fiscal Year 2021.

“We expect Indus Motors to post earnings of Rs2,453 million translating into an Earning per Share (EPS) of Rs31.2 up 33% QoQ and 149% Year-on-Year for 2QFY21. The major drivers are higher volumes by 23% QoQ and 93% YoY. The sales have been boosted by the arrival of new model i.e. Yaris, which outsold Honda Civic and City in October 2020 and November 2020,” stated Topline Securities in its latest report.

The report project earnings of automakers including Indus Motors, Pak Suzuki, Honda Cars and Millat Tractors to increase in the September-December 2020 quarter due to improvement in unit sales and gross margins.

“Auto sales are riding on strong momentum driven by higher demand amidst low interest rate and economic recovery, where unit sales of our universe have increased by 33% YoY and 13% QoQ.”

Out of the companies, Indus Motors, Pak Suzuki and Millat Tractors posted higher unit sales QoQ, however, Honda Cars volumes decline during the quarter. “Players such as Indus Motors had already intimated their plan to go on double shift which is evident from improvement in Indus Motors sales by 23% QoQ.”

We expect gross margins to improve this quarter as the companies on average raised price by 4-5%. “This coupled with currency appreciation of 4% is likely to bode well however some of these benefits are likely to offset by increase in Cold Rolled Coil (CRC) prices,” it said.