<ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">INDU’s FY1H19 earnings (EPS: PKR88, -6% Y-o-Y) held up much
better than what the market expected. Its order backlog and better pricing
power resulted in volumes and margins outperforming peers. However, it is not
out of the woods yet, and sales volumes are likely to falter as support from
its order backlog diminishes. We remain conservative, and expect volumes to
decline 2% Y-o-Y in FY19 (despite FY7M19 volumes up 9% Y-o-Y), which along with
a lagged pass through of input costs will result in its EPS bottoming out at
PKR154 (-23% Y-o-Y; P/E: 8.1x). In our opinion, buying Indus at 8.1x P/E on
relatively depressed earnings offers a very attractive risk/reward opportunity
i.e. limited downside risk, especially given a rock solid balance sheet, whi...
