Escorts Kubota‘s share price gained after the tractor manufacturer’s fourth-quarter results came in line with expectations. The management also forecast stronger exports markets in the coming year.
What Happened: The Rekha Jhunjhunwala-owned company's net profit grew 16.4% year on year to ₹251.9 crore in the March quarter. However, the company's revenue fell to ₹2093.5 crore versus ₹2214.5 crore in the previous year. The company's tractor volume fell by 14% in the quarter.
Management guided low-to-mid-single-digit growth in FY25 on normal monsoons. Managment also expects the railway business to grow in double digit as the division has an order book of ₹950 crore.
Analyst View: Macquarie upgraded the stock to “outperform” from “neutral” and hiked the target price from ₹2960 to ₹3880. The brokerage expects the domestic tractor segment to see demand recovery in FY25. The exports segment is also expected to pick up in the coming financial year.
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Analysts at Emkay downgraded their rating to “add” from “buy”. The brokerage also revised the target price from ₹3350 to ₹3850 due to optimistic exports.
According to the analysts, the strong exports outlook by the company in FY25 is backed by structural positives like new product introduction from the third quarter, direct component exports to Kubota which is happening due to the China-plus-one factor as global sourcing is shifting towards India.
Axis Securities maintained their “hold” rating as they await more clarity on recovery in tractor segment. They expect weakness in the tractor segment in first half of FY25 due to elections and weak brick and mining sector. However, they see a moderate demand recovery in the second half due to pent-up demand and normal monsoon.
Price Action: Escorts Kubota stock was trading 2% higher at ₹3516.1 in afternoon trade on Friday.
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