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Analyst Research Report Snapshot


Indus Motor Company: Pressure on margin to continue in 2H; maintain Neutral rating




Foundation Securities Private Limited


28 Feb 2013





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Event * Indus Motor Company Ltd (Indus) posted an unimpressive set of numbers with EPS of PKR3.65/sh (1HEPS of PKR12.44).The big drag on margin in 2Q resulted in 59% drop in QoQ earnings. Indus also announced DPS of PKR6/sh along with the results. * While 2H should reflect improvement over 1H, however the big turnaround in earnings based on margin jump is unlikely to materialize in our view. We believe easing in cost pressure would be more apparent in FY14 and hence upgrade our estimates by 7%/12% over FY14/FY15. We maintain our Neutral rating. Price catalyst * June-13 price target: PKR320 based on DCF methodology. * Catalysts: Announcement of AIDP-2, trend in global steel prices, JPY/PKR parity, revision in age limit of used car and change in prices

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