Indus Motors Company Limited: Resilience in Pakistan's Automotive Sector

Indus Motors Company Limited, known by its stock symbol INDU, has been a significant player in Pakistan's automotive industry since its establishment in 1989. This company is a joint venture involving the House of Habib, Toyota Motor Corporation, and Toyota Tsusho Corporation from Japan. Indus Motors is primarily engaged in assembling, progressively manufacturing, and marketing vehicles under the Toyota and Daihatsu brands in Pakistan. Additionally, it serves as the sole distributor for these brands in the country.

As of June 30, 2024, Indus Motors has approximately 78.6 million shares outstanding, owned by around 4,192 shareholders. Notably, foreign investors hold a majority stake of 77.54 percent in the company, while associated companies and related parties own 6.25 percent. Insurance companies account for 5.65 percent of the shares, and the general public holds 5.41 percent. The remaining shares are distributed among various other categories of shareholders.

Over the years, Indus Motors has faced challenges, particularly in its topline performance, which saw declines in 2020, 2023, and 2024 due to reduced sales volumes. The company's bottom line also suffered, with significant drops in net profit recorded in 2019, 2020, and 2023. However, there was a rebound in margins in 2021, although the following two years saw a decline, with a slight improvement in operating margins in 2023. By 2024, the margins had significantly improved, indicating a potential recovery.

In 2019, Indus Motors experienced a 13.1 percent increase in its topline, driven by a 3.45 percent rise in sales volumes, particularly of the popular Toyota Corolla. However, the cost of sales surged by 19.83 percent due to higher input costs and the depreciation of the Pakistani Rupee, leading to a 19.65 percent decline in gross profit. Distribution expenses also rose, reflecting increased advertising and promotional activities.

The year 2020 was particularly challenging, with the company's topline plummeting by 45.46 percent, primarily due to the impact of COVID-19 on economic activity. Sales volumes dropped by 56.45 percent, resulting in a significant decline in gross profit and net profit. Despite these challenges, Indus Motors managed to adapt by shifting its marketing strategies online.

In 2021, the company rebounded impressively, selling 57,731 CKD and CBU units, which was a remarkable 100.20 percent increase compared to 2020. The introduction of new models, including facelift versions of popular vehicles, contributed to this growth. The topline grew by 107.92 percent, and gross profit margins improved, reflecting better pricing and higher sales volumes.

Indus Motors Company Limited has demonstrated resilience in the face of economic challenges and market fluctuations. While the company has faced significant hurdles, its ability to adapt and innovate has allowed it to recover and grow. As the automotive industry in Pakistan continues to evolve, Indus Motors remains a key player, and its future performance will be closely watched by investors and industry analysts alike. The journey of Indus Motors serves as a reminder of the importance of adaptability and strategic planning in achieving long-term success in a competitive market.