The second largest automotive assembler in the country, Indus Motors (PSX: INDU) saw a 23 percent growth to its top-line in 1HFY18 and a subsequent 21 percent increase in its bottom-line during the period year on year. This is the result that makes shareholders happy.

The top-line growth comes on the back of higher sales and price increases for cars in Dec-17. After rupee depreciation, the three auto assemblers raised prices for most of their variants. Indus Motors increased prices by 2.5-3.5 percent, or from Rs50,000 to Rs60,000 in value to offset the exchange rate difference. Overall volumetric sales growth stood at 6 percent in 1HFY18 with a healthy sales mix and greater sales for higher-priced variants. Both Hilux and Fortuner rallied strong with Fortuner sales soaring up by 8 times. Flagship Corolla with a higher volumetric weight saw a slight decrease in sales despite the company working on overtime. In fact, production of Corolla fell by 1 percent in 1QFY18 and 4 percent in 2QFY18 so clearly sales are squeezed due to under capacity.

Even so, revenue per unit sold grew by 17 percent for INDU in 1HFY18. The higher revenue flow and good cost management contributed to a slight up tick in gross margins from 17 percent to 18 percent in 1HFY18. This despite higher than before steel prices that makes up for a good share of production costs. Indirect expenses were also kept from going up—which remained around 2 percent of revenues in 1HFY18 against this period last year.

Meanwhile, finance costs expectantly grew. Share in revenues went up from 0.23 percent to 0.43 percent in 1HFY18, as the company made hefty investment (Rs4 billion) into removing bottlenecks and enhancing production. Increase in other income was brought on by short term government securities investments, and advances from customers. All of these factors together with a lower effective tax rate of 30 percent (31% in 1HFY17) contributed to a solid earnings per share. Subsequently, INDU offered an interim cash dividend at Rs31 per share, in addition to the first interim cash dividend already paid at Rs30 per share.

Because of Honda’s rising market share; Indus Motors lost a good chunk of its own, coming down from 29 percent during 1HFY17 to 24 percent in 1HFY18. However, future expectations are far from bleak. The company is set to launch its diesel Fortuner. The SUV has done phenomenally well and sales are witness. Hilux-Revo has also been a favourable launch, now capturing 11 percent share in sales mix, against 8 percent last year. The bottlenecking might enhance much needed capacity for Corolla production which remains in high-demand.