Indus Motor Company (INDU) announced its 2QFY26 results on Friday, where the company recorded profit of Rs5.98bn (EPS of Rs76.11), up 23% YoY. The result came in line with industry expectations.
This took 1HFY26 earnings at Rs12.7bn (EPS of Rs161.60) up 28% YoY compared to 1HFY25 profit of Rs9.96bn (EPS of Rs126.68).
INDU announced an interim cash dividend of Rs46/share, taking 1HFY26 total dividend to Rs97/share (1H Payout ratio 60%).
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Gross margins stood at 13.1% for 2QFY26, lower than expectations, down from 14.1% in 2QFY25 and 13.4% in 1QFY26. The decline is likely due to higher sales of Corolla, Yaris, and Cross variants relative to Fortuner and Hilux on a QoQ basis, in our view.
Notably, Fortuner and Hilux sales dropped by 30% QoQ, possibly due to intensifying competition from newly launched Chinese pickups and SUVs, which may have contributed to the decline in Fortuner and Hilux sales.
In 1HFY26, gross margins increased to 15.2% compared to 13.8% in 1HFY25.
Net sales of the company rose by 33% YoY but down 7% QoQ to Rs57.5bn in 2QFY26. YoY increase driven by a 67% YoY rise in units sold reaching 10,674 units in 2QFY26 compared to 6,381 units in 2QFY25.
Other income increased by 43% YoY and 83% QoQ to Rs5.3bn in 2QFY26. To highlight, cash and cash equivalent remained at Rs100bn in Dec-25 quarter.
The effective tax rate stood at 43% for 2QFY26, compared to 40% in 2QFY25 and 38% in 1QFY26. 1HFY26 effective tax rate stood at 41% up from 39% in 1HFY25. INDU is trading at a FY26E/27F PE of 5.7/5.2x and a dividend yield of 10%/11%.
