Escorts Kubota Ltd. share price target

We maintain our BUY rating with a revised target price of Rs 1,600 (from Rs 1,400 earlier) valuing the company at 17x FY23E P/E.

Escorts (ESC) reported Q3FY21 revenue at Rs 20bn (+24% YoY) and above-estimated operating margins at 18%.

Escorts (ESC)'s 3QFY21 performance was in-line, with strong profitability and over 80% PAT growth. This was led by strong tractor volumes, a favorable mix, and cost-cutting initiatives. While the demand outlook...

Escorts in involved in production of agri-machinery, construction and material handling equipment and railway equipment from its plants at various locations. With a domestic market share of 11.6% at the end of last fiscal the company sells a wide range of tractors under the Farmtrac, Powertrac and Steeltrac brands. Its...

Domestic auto industry volumes have been on a steady mend in the months post lifting of lockdown restrictions. Manufacturing and distribution activities have been getting ramped up gradually since June 2020, in step with the rest of the economy. However, the impact of the pandemic on the supply chain continues to inhibit a complete return to production normalcy. Nevertheless, most automotive industry segments have reported successive improvement in offtake throughout June-November 2020 (Exhibit 1) on the back of (i) initial bounce provided by pent-up aspect,...

Escorts clocked a striking operational performance with revenue growing by 24% YoY to 16.5bn in 2QFY21 against 10.3bn in 2QFY20 while EBITDA margins stood at 18% up 870 bps YoY. The improvement in margins was attributable to tractor division which registered 20% EBIT margins for the quarter (up 973 bps YoY) on the back of improved product mix, operating leverage benefits and cost control...

Blended margin trajectory at Escorts has undergone a drastic improvement (~6% in FY14 to ~11.7% as of FY20), backed by volume growth and product mix improvement. The company posted highest ever quarterly EBIT margin of 20% in tractors during Q2FY21, riding on sharp product mix improvement (>40 hp segment forming about two-third of sales vs. 45% last year, cost initiatives, operating leverage). Commodity cost pressures and normalisation of some stated benefits is seen shaving ~100-200 bps off the record print. However, the management expects ~17-18% EBIT margin...

We upgrade our rating from HOLD to BUY with a revised target price of Rs 1,400 (from Rs 1,300 earlier) valuing the company at 15x FY23E P/E

Escorts clocked best ever operational performance with topline growing by 24% yoy to INR 1,654 cr in Q2FY21 and EBITDA margins clocking 18% up 870 bps yoy.

Escorts (ESC) reported strong Q2FY21 revenue at Rs 16.4bn (+24% YoY) with sharp 880bps operating margin expansion to 18.4%.