Escorts Kubota Surges To Record High As Mid-Term Guidance Buoys Investors
Shares of Escorts Kubota rose to a record high of 2,206.15 on BSE today after the company unveiled its business guidance plan for the medium-term.
The stock breached the previous record high by steadily rising most of the trading today as investor sentiment was buoyed by its growth plans. The stock, however, pared some of its gains to end the day at Rs 2,186, up 7.59 per cent from its Friday's close.
The mid-term plan, as unveiled by the tractor manufacturer, in a recent analysts call, guides for 2.5 times growth in revenue from the FY 2022 (Financial Year) level. The revenue stood at Rs 7,152.68 as of FY 2021. For the second quarter of this financial year, the company reported a net profit of Rs 87.66 on a revenue of Rs 1,883.48 crore.
The mid-term business plan also aims to invest up to 5 per cent of net profit in Research and Development.
It aims to add another manufacturing plant by FY 2028 and increase the tractor and engine capacity from approximately 1.7 lakh to about 3 lakh units.
Motilal Oswal in a note said Escorts has intensified its focus on comprehensive growth across its business verticals. Seamless execution in targeted areas such as market share gains in the domestic tractor industry, and growth in exports through Kubota channel, would be monitored.
However, in the near term, uncertainty in the tractor cycle would continue, led by an anticipation of a sharp inventory correction in Q3 (October-December), it said.
Faster recovery in other businesses and a ramp-up in its partnership with Kubota would dilute the impact of a weaker cycle, it added.
The company is now focusing on comprehensive growth across business areas. The focus would revolve around growing market share in India through new product launches and channel expansion, and attaining leadership position in exports, Motilal Oswal said.
Escorts aims to increase its export contribution to 15-20 per cent of the overall revenue by FY28 from its current 6.4 per cent. The company is targeting four key high-volume markets -USA, Europe, Thailand, and Brazil.
