The 31 reports from 11 analysts offering long term price targets
for Escorts Ltd. have an average target of 1155.78. The consensus estimate
represents a downside of -3.76%
from the last price of 1200.95.
Seminal year for industry provides interesting insights However, amid all the gloom, the engineering and production prowess of the industry (along with its value chain) shone brightly as it successfully completed the world's fastest switchover to Euro 6 equivalent emission norms i.e. BS-VI as per schedule. Much of the post festive period was focused on the transition, with the entire ecosystem estimated to have spent ~| 70,000 crore towards the technological leap. Covid-19 crisis struck India in the run up to April 2020, just as the changeover...
We revised our volume estimate and factor 13%YoY growth for H2FY21 and 20% growth from H1 to H2 owing to significant farm mechanization and higher government participation. Escorts Ltd (EL) is the third largest Agricultural tractor manufacturer in India. It has strong presence in the north and west market, with an overall market share of 11.6% as on FY20. Tractor demand was robust across the country. Price realisation was very good as farmer's cash flow has been very strong....
Q1FY21 revenue de-grew by 25%YoY largely on account of production lockdown in April and May. However for the June month, the volume growth was 21%YoY. EBITDA margin expanded by130bps due to softening metal price,...
Escorts Ltd. (EL) reported net sales of INR 10.6 bn in 1Q FY21 (~25.4% decline over INR 14.2 bn YoY) and a PAT of INR 922 mn (up 5.3% YoY). Escorts Farm Equipment (EFE) segment volume declined 13.8% while Escorts Construction Equipment (ECE) segment volume a declined 78.1%. EBITDAM (excluding other income) improved by 126 bps YoY (-282 bps QoQ) on the back of improving product mix, benign commodity prices and various cost cutting measures despite negative operating leverage and no price increases taken during the quarter. RM cost as % of sales decreased 185 bps while Operating & Manufacturing Expenses decreased 268 bps while employee expenses as % of sales increased 327 bps. Nationwide lockdown due to pandemic of Covid19 dragged volumes in both ECE and EFE divisions led de-growth....
We await detailed timelines for integration with Kubota's global operations and set a revised target price of Rs 1,200 at 16x Jun-22 EPS. We downgrade Escorts to ADD, after the stock has more than doubled from its COVID lows (+35% from our initiation). The fund infusion from Kubota has been completed, and demand has revived led by good monsoons/encouraging kharif sowing. However, valuations are now trading well over mean P/E levels and are factoring in the near-term positives, in our view.
Escorts reported relatively healthy Q1FY21 numbers. Total operating income was at | 1,062 crore, down 25.4% YoY. Within its segments, gross revenue from agri equipment machinery (EAM) i.e. tractors was at | 954 crore (down 12.7% YoY), tracking unchanged ASP QoQ (| 5.25 lakh/unit), 13.8% YoY decline in volumes to 18,150 units. Gross revenue from construction equipment (CE) de-grew 75.3% YoY to | 52 crore (volumes down 78% YoY to 234 units) while revenue from railway equipment (RED) was down 53.5% YoY to | 55 crore. Present railway order book of | 480...
INR2.25-2.5b in FY21 for new product development and capacity We are upgrading our EPS estimates by 9%/7% for FY21/FY22E to reflect the improving outlook for tractor volumes, mix and cost savings. - Margin has improved due to lower commodity cost Improved product mix (>40hp tractors), as share of 40HP+ tractors has increased to 62% in 1QFY21 (v/s 45-46% YoY) v/s 57-58% in 4QFY20, Subdued discounts during the quarter, which is expected to remain subdued till the supply chain normalizes, and Other expenses being lower by INR300-350m due to (a) no SG&A; expenses in 45 days shutdown (had resulted in no cost on SG&A; of INR300-350m, and (b) no marketing spends, both of which will normalize in the coming It has aggressive plans to cut fixed cost by 10-15% in FY21. Our estimates are not yet factoring in any contribution We are upgrading our EPS estimates by 9%/7% for FY21/22E to reflect the improving outlook for tractor volumes, mix and cost savings.
Escorts is a prominent tractor player domestically with market share in excess of 11%. The company's brand of tractors is particularly strong in the northern as well as the eastern belt of India. With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as expectation of normal monsoon 2020, we expect the tractor industry to outperform the larger automobile space in FY21E with Escorts a key beneficiary. Escorts in the recent past has also entered into a strategic partnership with Kubota Corporation of Japan (one of the global...
Initiate with a BUY: We set a target price of Rs 950 at 15x FY22E EPS. We value the stock at a 15% premium to the last five year average trading multiple. We believe the equity infusion by Kubota will strengthen the balance sheet and will provide multiple growth avenues for Escorts both in India as well as internationally. Key risks: Any delay in implementation of reforms by the government, delays in fund infusion by Kubota/material changes in the arrangement between the two partners. We initiate on Escorts with a BUY as the domestic tractor OEM will benefit from the equity investment by Japans leading tractor major Kubota. The partnership will provide new growth avenues for Escorts across product segments (including mechanised equipment) as well as geographies (new export markets as well as manufacturing base for Kubotas international operations). Further, the government is rolling out structural reforms in the agricultural segment, which will enhance farm incomes. These initiatives will promote mechanisation of agriculture.
Q4FY20 revenue de-grew by -15%YoY largely on account of production lockdown and 20%YoY decline in tractor volume and 26%YoY in construction equipment sales. However softening metal price, localization, cost control initiative and superior product mix has expanded the margin to 245bps at 14.1%. Adj. PAT grew by 15.5%YoY supported by lower tax. The government's action towards improving the agricultural...
Background: Escorts Ltd (ESC) is one of India's prominent players in the Automotive / Tractor industry, with an overall market share of 11.2% in the domestic tractor industry. ESC is also present in construction and material handling equipment, such as cranes, compactors and forklifts with 55% market share in material handling segment. Revenues share by segment in 4QFY20: Agri machinery (77.0 %), Construction equipment (15.0%), and Railway equipment (8.0%). The company has collaborations with seven Technology giants- Microsoft, Reliance Jio, Trimble, Samvardhana...
Escorts reported better than expected results on the revenue front at Rs1380cr, ~15% decline y/y (v/s expectation of >20% decline). It reported a robust EBITDA margin of 14.1% (up ~250 bps) beating estimates of ~12%.
Tractor: Steady state market share, rural slate to limit decline The tractor industry has been at the forefront of farm mechanisation in India with total tractor sales pegged at 7.1 lakh units in FY20. Escorts is a prominent tractor player domestically with market share as of FY20 pegged at 11.6%, 130 bps in FY16-20. Given the rural centric tractor demand that is relatively less impacted by Covid-19, the domestic tractor industry is expected to outperform the rest of the automobile industry in FY20. The tractor industry is also likely to benefit from upbeat farm...
It expects to We are upgrading our EPS estimates by 3%/2% for FY21/22E as we tweak our volumes for tractors and growth for other businesses. Subsidy-based sales are expected to return in FY21 and could be higher than Kubota JV SOP is estimated by 3QFY21, it has been delayed due to the In 4QFY20, addressable Construction Equipment industry stood at -24% (v/s - 32.2% for Escorts with 50% sales decline in month of Mar20). Through this partnership, ESC gains access to (a) global product knowhow (in tractors and implements), (b) global distribution network, and (c) global supply chain (by We expect the railway business to deliver ~15% CAGR over FY20-22E, benefitting from the ramp-up in new products, whereas construction equipment revenues are estimated to be flat over FY20-22E. Our estimates are not yet factoring in any contribution from We are upgrading our EPS estimates by 3%/2% for FY21/22E to reflect the improving outlook for tractor volumes, mix and cost savings.
Limited impact of COVID in rural areas provides a relative cushion: Escorts '80%+ revenue comes from the agri-machinery segment and the limited impact in rural areas of corvid-19 should provide a relative cushion to the overall demand of tractors.
