By Indus Motor Company (PSX: INDU) has announced robust financial results for the first half of FY26, posting a Profit After Tax (PAT) of Rs. 12.70 billion, translating into earnings per share (EPS) of Rs. 161.60. This reflects a strong 28 percent year-on-year (YoY) increase compared to Rs. 9.96 billion (EPS: Rs. 126.69) recorded in 1HFY25.
According to Arif Habib Limited, this marks the highest half-yearly profit reported by the company since 2014, underscoring a significant recovery in Pakistan’s automotive sector.
Strong Quarterly Performance and Sales Growth
In the second quarter of FY26 alone, INDU posted a PAT of Rs. 5.98 billion (EPS: Rs. 76.11), up 23 percent YoY from Rs. 4.87 billion (EPS: Rs. 61.92) in the same period last year.
Net sales for 1HFY26 surged 40 percent YoY to Rs. 119.20 billion. During 2QFY26, net sales rose 36 percent YoY to Rs. 57.46 billion, compared to Rs. 42.38 billion in 2QFY25. The impressive growth was primarily driven by higher sales volumes, which jumped 67 percent YoY to 10,674 units in the second quarter.
The company’s popular models — Yaris, Corolla, and Corolla Cross — remained key contributors, accounting for 9,094 units sold during the quarter. Meanwhile, Fortuner and Hilux added another 1,580 units, reflecting healthy demand across both passenger and SUV/pickup segments.
Margin Trends and Cost Pressures
Gross margins improved to 15.2 percent in 1HFY26, compared to 13.8 percent in the same period last year, supported by better pricing dynamics and operational efficiencies. However, quarterly gross margins eased to 13.1 percent in 2QFY26 from 14.1 percent in the previous quarter, largely due to a higher sales mix of lower-priced variants.
Other income rose sharply by 43 percent YoY to Rs. 5.32 billion in 2QFY26, driven by higher returns on cash and cash equivalents. Finance costs also increased to Rs. 82 million in 2QFY26, compared to Rs. 38 million a year earlier, while cumulative finance costs for 1HFY26 stood at Rs. 132 million.
The effective tax rate for 1HFY26 increased to 41.0 percent, compared to 39.4 percent in 1HFY25, reflecting higher taxation pressures.
Dividend Announcement and Outlook
The company declared a cash dividend of Rs. 46 per share for 2QFY26, bringing the cumulative dividend payout for 1HFY26 to Rs. 97 per share.
Based on current performance and outlook, Arif Habib Limited has maintained a “Buy” recommendation on INDU stock. The company is currently trading at attractive FY26 and FY27 price-to-earnings multiples of 6.1x and 5.8x, respectively, signaling potential value for investors amid improving auto sector fundamentals.
