Press Release

VIS Reaffirms Entity Ratings of Indus Motor Company Limited

Karachi, November 15, 2024: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of Indus Motor Company Limited (INDU or the company) at ‘AA+/A1+’ (Double A Plus/A One Plus). The medium to long term rating of ‘AA+’ high credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short term rating of ‘A1+’ signifies strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous ratings action was announced on October 02, 2023.

The assigned ratings reflect INDU's leading market positioning in the local automotive industry with a strong dealership network together with a sound financial profile. Ratings also incorporate Company’s strong sponsor profile being a joint venture between Toyota Motor Corporation and Toyota Tsusho Corporation of Japan, as well as House of Habib.

Amid economic slowdown during FY23 and FY24, automobiles sales witnessed a sharp decline, wherein volumetric sales of passenger cars (PC) slumped by 16% during the period under review. However, during 2MFY25, with the rebound in the economic indicators and decline in interest rates, sales of PC segment improved by 28% compared to SPLY. Amidst economic pressures and increased competition from new players, market share of the Company was impacted in FY24. Volumetric decline in sales resulted in lower revenues, although gross margins continued to depict improvement as a result of higher prices. Higher gross margins, rising investment income led to a bottom-line increase of 56% during FY24. Ratings draw support from Company's strong liquidity position represented by substantial liquid assets, while improved cash flows strengthened company’s financial position. Higher equity base supported by sound profit retention, contributed to low financial risk profile. Going forward, maintenance of strong margins, adequate coverages, and minimal debt levels, will remain important for ratings.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.



Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .