LAHORE - The Indus Motor Company Limited (INDU) has announced its 9MFY12 financial results, registering a massive 81 per cent YoY jump in its earnings to Rs2.89b translating into an EPS of Rs36.82 as against the PAT of Rs1.60b and EPS of Rs20.39 in the corresponding period last year. The exciting growth in the bottom line can be attributed to the massive growth in the top line of the company which has posted a rise of 19 per cent YoY to Rs53.93b in comparison of the sales of Rs45.29b in the same last year owing to be higher prices and better volumetric sales.

The operating profit of the company has registered an enormous upsurge of 100 per cent YoY to Rs3.33b as against Rs1.66b in 9MFY11 despite of 15 per cent YoY higher operating costs.

The company has reported a substantial growth of 70 per cent YoY in its EBIT to Rs4.33b versus Rs2.54b in the same period last year mainly because of 21 per cent YoY rise in other income. On the other hand, financial cost of the company was has declined by a sharp 19 per cent YoY to Rs50m as against R62m recorded in 9MFY11 which has enabled the company to post an added growth of 72 per cent YoY in PBT which has reached at Rs4.28b in 9MFY12 as against PKR2.48bn in 9MFY11.

Experts believe that the higher remittances and wheat support prices were among the key factors behind the growth during the 9MFY12, however, keeping in view risks to the macroeconomic stability primarily because of the fiscal weaknesses and falling financial inflows we see further pressure on rupee which has already depreciated massively in FY12.

They said that further depreciation in the rupee can force the company to go for another price hike as the company imports its major parts from Thailand and Japan and rupee depreciation makes imports expensive.

We believe since the company which has already increased its prices recently to mitigate foreign exchange losses if goes for another price increase that would put a negative impact on its sales going forward.