Indus Motor sees a 75% drop in profits.

Why does Indus Motor see a 75% drop in profits? The company's first quarter FY23 net revenues amounted to Rs37.2 billion, down from the previous year.

The Indus Motor Company (INDU), based in Karachi, has reported a 75% decline in net profits for the first quarter ending in September 2022.

The carmaker's profit after tax (PAT) of roughly Rs1.3 billion in the most recent quarter was shockingly low compared to the Rs5.4 billion it made in the same period a year before. For the period under review, earnings per share (EPS) was Rs16.5, down from Rs69.0 in the corresponding period a year ago.

"The results are worse than the industry predicted; a substantial variance came from gross loss," said Asad Ali, an Insight Securities analyst, specialising in the auto business.

However, he also said that the company's effective tax rate was recorded at 88% in the fourth quarter of FY 2022, which eroded the bottom line, even though "on a sequential basis, earnings climbed by 76% due to the absence of a 10% super tax."

According to Ismail Iqbal Securities's auto analyst, "the business has also issued an interim cash dividend of Rs8.2 per share," which "accompanies the outcome."

Furthermore, in the discussion of Indus Motor see a 75% drop in profits; Topline Securities' Deputy Head of Research Sunny Kumar said, "Net sales for INDU decreased to Rs37.2 billion during the first quarter of FY23, down by 43% year-on-year, due to reduced volumetric sales by 52% year-on-year, amid higher car costs and lower output."

Lower trading margins and lower volumetric sales caused lower fixed cost absorption, leading to the company's first-quarter gross loss of Rs2.3 billion, as noted by Ali. These factors are primarily attributable to the sudden movement of the Pakistan rupee against the US dollar and a ban on importing entirely built units (CBU). He said, "The automaker's revenues dropped by 43% year over year and 48% quarter over quarter during the first quarter of FY23, mainly owing to a reduction in volumetric sales amid supply restriction.

If you want to read more about the Indus Motor and see a 75% drop in profits; click here