Financial Analysis

Presented by : Prince Wamiq Rasheed (15708)

: Ali Amir Ali (16212)
: Talha Shams (15247)

Industry Overview
Type: Automobile, Four Wheeler,
Passenger cars

Capacity wise Market Share

Main Players: IMC, Honda, Pak

Suzuki

48

Monopoly in small car segment

Underutilized capacity due to:
Use of obsolete technology (Hybrid,
Solar, Auto cars, Auto brake,
biometric access, HUD)
Lack of basic safety considerations
(Air bags, ABS)
Used Cars Import

16
36

1300 & above

1000

800

Company Introduction
Incorporated on November 04, 1992
Joint venture between Honda Motor Company Limited
Japan, and the Atlas Group of Companies, Pakistan.
Sponsors: M/s Honda Motor Co. Ltd. (51%), M/s Shirazi
Capital (Pvt.) Ltd. (22.78%), M/s Shirazi Investments
(Pvt.) Ltd. (7.42%)
06 product lines (City, City Aspire, Civic, CV-R, Accord,
HV-R)
Competitors: IMC, Pak Suzuki

Honda Atlas V/s Indus Motors

Installed Capacity

Average Production

Average Sales

Atlas Honda

50,000

18,682

18,682

IMC

54,800

40,034

40,082

Peer Comparison (Production)

60,000

Peer comparison
(Sales)

50,000

60,000

40,000

50,000

30,000

40,000

8
29

30,000

20,000

20,000

10,000
-

Market Share

63

10,000
2015 2014 2013 2012 2011
Atlas Honda

Indus Motors

2015 2014 2013 2012 2011

Atlas Honda

Indus Motors

Honda Atlas
Suzuki

IMC

Honda Atlas V/s Indus Motors

Capital Structure (2015)

Dividend History
2015

2014 2013

HONDA
Millions

INDUS
MOTORS
Millions

Honda Atlas Cars

Dividend (millions)

714

428

43

Long term debt

Dividend per share

5.0

3.0

0.3

Short term debt

Dividend Payout %

22.58

Working capital

1,806

18,469

Equity

5,120

24,036

Revenue

37,764

96,516

Net profit

3,162

9,110

Dividend

714

4,889

22.15

115.9

EPS

NP Margin (%)

8.4

39.9 17.54
2.7

0.3

Indus Motors Company

Dividend (millions)

6,288

Dividend per share

80

Dividend Payout %

69.02

NP Margin (%)

9.44

2,318 1,965
29.5

25

59.86 58.52
6.79

5.26

Financial Performance (2015)

Rupees in thousand
Sales
Cost of sales
Gross profit
Distribution and marketing
costs
Administrative expenses
Other income
Other expenses

Profit from operations

Finance cost
Profit before taxation

Taxation

2015

2014

3.5%
9.1 %
67%

37,764,159
(32,991,341)
4,772,818

39,153,254
(36,296,009)
2,857,245

27%

(434,257)

(340,556)

(319,940)

(287,026)

218,979

270,548

(451,897)

(364,890)

(987,115)

(721,924)

3,785,703

2,135,321

(18,666)

(38,075)

3,767,037

2,097,246

(604,660)

(1,023,576)

Analysis
Launch of 11th generation Toyota corolla in July
2014.
Decline in prices of raw material
Favorable exchange rate parity
Decline in commodity prices (Steel, oil)
Increased admin and selling expense to maintain
sales momentum.
Reduced Finance Cost as the company is now able
to deliver the cars in 60 days of advance payment

Ratio Analysis
RATIOS
Current ratio
Quick ratio
Total liabilities to equity
Days sales in inventory days
Operating cycle
Payment conversion period
Cash cycle
Dividend payout ratio
Return on equity %
Earning / (loss) per share Rs
Price earning ratio Times
Dividend per ordinary share Rs
Break up value per share Rs
Market value per share Rs

HONDA ATLAS CARS

INDUS MOTORS COMPANY

INDUSTRY
AVERAGE

1.20

1.53

1.76

0.60

0.97

1.03

1.72

1.10

1.11

61

27

48

61

31

52

41

42

42

20
23%

(11)
69%

10
38%

62

38

41

22.10

115.91

8.30

10.78

5.00

80.00

36.00

305.80

183.00

1,249.00

33.33

Balance Sheet
Rupees in thousand

2015

2014

No

te
EQUITY
AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized share capital
200,000,000 (2014: 200,000,000)
ordinary shares of Rs 10 each

2 ,0 0 0 ,0 0 0

2,000,000

1 ,4 2 8 ,0 0 0

1,428,000

Issued, subscribed and paid up share capital

142,800,000 (2014: 142,800,000)
ordinary shares of Rs 10 each
R e s e rv e s

5
6

Accumulated profit

526,000

76,000

3 ,1 6 5 ,7 5 2

887,220

5 ,1 1 9 ,7 5 2

2,391,220

NON-CURRENT LIABILITIES
D e f e r r e d lia b ilit ie s

D e fe rre d re v e n u e

52,552

44,425

11,623

11,709

64,175

56,134

CURRENT LIABILITIES
Current portion of deferred revenue
Short term borrowings - secured
Accrued mark up
Trade and other payables

CONTINGENCIES AND COMMITMENTS

4 ,6 5 1
8
9
10

1 ,7 6 2

13,790

8 ,7 3 5 ,7 2 9

9 ,8 5 6 ,2 4 5

8 ,7 4 2 ,1 4 2

9,870,035

1 3 ,9 2 6 ,0 6 9

12,317,389

11

Balance Sheet

Analysis
Cash position improved by 43% in 2015
Cash utilization: Working capital and capital
work
For loans and advances, there is a huge amount
of Rs. 1,003 million due from government in the
form of income tax which will be adjusted in
years to come whereas other prepayments and
loans and advances to suppliers will be
converted to cost of goods sold.

Projected Income Statement (2016)

Honda Atlas
Income Statement
Future 2016

2015

2014

2013

2012

2011

46,827,557

37,764,159

39,153,254

30,274,604

16,599,608

22,026,109

(40,909,263)

(32,991,341)

(36,296,009)

(28,827,522)

(16,643,607)

(21,826,799)

5,918,294

4,772,818

2,857,245

1,447,082

(43,999)

199,310

Distribution and marketing cost

(568,877)

(434,257)

(340,556)

(218,707)

(130,550)

(139,185)

Administrative Expenses

(383,928)

(319,940)

(287,026)

(201,908)

(158,943)

(171,729)

227,738

218,979

270,548

213,434

204,456

83,977

(560,352)

(451,897)

(364,890)

(524,117)

(217,842)

(64,945)

4,632,876

3,785,703

2,135,321

715,784

(346,878)

(92,572)

(18,666)

(18,666)

(38,075)

(190,967)

(151,926)

(152,255)

4,614,210

3,767,037

2,097,246

524,817

(498,804)

(244,827)

(740,643)

(604,660)

(1,023,576)

(280,530)

(33,409)

(53,625)

3,873,567

3,162,377

1,073,670

244,287

(532,213)

(298,452)

(Rupees in thousand)
Sales
Cost of Sales
Gross Profit/ (loss)

Other operating income

Other operating expenses
Profit/ (loss) from operations
Finance Cost
Profit/ (loss) before tax
Taxation
Profit/ (loss) after taxation

Basis For Projected Income Statement (2016)

Sales: Increase 24%, average of last 5 years
Cost of sales: 87% of sales in 2015, due to expected
decrease in exchange rate and commodity prices
Admin and Selling expense: Average of last five years sales
to admin & selling expense ratio
Other operating income: 1% of sales on average
Operating Expense: 1% of sales on average
Finance cost: 0.1% of sales, last two years average.
Tax rate: Same as of 2015.

Future outlook
New Model to boost volumetric growth
Better working capital management
Auto financing backing the sector growth