Press Release

VIS Reaffirms Entity Ratings to Indus Motor Company Limited

Karachi, June 29, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of ‘AA+/A-1+’ (Double A plus / A-One Plus) to Indus Motor Company Limited (IMC). Outlook on the assigned ratings is ‘Stable’. Long term rating of ‘AA+’ signifies high credit quality and strong protection factors. Risk is moderate but may vary slightly from time to time because of economic changes. Short Term Rating of ‘A-1+’ signifies high certainty of timely payments; short term liquidity including internal operating factors and/or access to alternative sources of funds is outstanding and safety is just below risk free Government of Pakistan’s short term obligations. Outlook on the assigned ratings is Stable. Previous rating action was announced on June 07, 2021

The assigned ratings reflect IMC’s leading market positioning in the local automotive industry, robust financial profile and sound business risk profile. Ratings also incorporate Company’s strong sponsor profile and ongoing efforts to enhance product competitiveness and strengthen operating performance. While gross margins of IMC were lower in FY21 and 9MFY22, IMC has maintained robust financial profile and low leveraged capital structure despite challenging macro-economic environment. Ratings further draw support from strong balance sheet and abundant liquidity to be able to navigate through economic downturns.

FY21 proved to be a strong year of performance for the automobile sector. The local car industry including Cars, LCVs; 4x4 & Pick-Ups recorded handsome growth. This was attributable to the low interest rate environment and economic recovery experienced in post COVID period. Auto sales jumped significantly during 9MFY22 as well despite turn of events including ever rising auto prices, overall heightened inflationary pressures and monetary tightening. Auto sales are expected to decline in lagged manner incorporating impact of toughening macros, rising car prices and other incidentals going forward.

Cyclicality in sales due to slowdown in GDP growth and frequent policy changes are key business risk factors for Automobile industry. Meanwhile business risk profile for the Company is considered sound given solid franchise, high brand value and strong competitive position in the product segment in which IMC operates. Strong dealer network and discouraging trend in imported car sales further supports business risk profile, whereas significant rupee devaluation and competition emanating from new players is likely to impact profits to some extent. Nevertheless, support is drawn from rising car prices for the Company. IMC sales mix also benefits from healthy mix of urban and rural segment.

For further information on this rating announcement, please contact Ms. Nisha Ahuja, CFA or the undersigned (Ext: 201) at (021) 35311861-66 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates (August 2021)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .