- 10 May 2023
- ICICI Securities
Company reported healthy performance in Q4FY23 with tractor segment ASP’s & margins surprising positively.
Escorts Kubota Ltd | CMP: 4126 | Market Cap: 45,590.92
Q4FY23 Earnings Summary
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Escorts Kubota is a prominent tractor maker domestically with 10.1% market share as of FY23. With Kubota having majority share in the company & steady rural sentiments domestically expectations are ripe for much larger play by the company in the farm mechanisation side both domestically as well as globally. Further recently company unveiled its midterm business plan with new co-promoter i.e. Kubota; the key highlights of which include (i) aspiration to grow revenues to >2.5x of FY22 levels (i.e. ~| 22,500+ crore in FY28E, implied CAGR of 16.5%+); (ii) increase share of exports from ~6.4% in FY22 to ~15-20% in FY28E; (iii) target EBITDA margins to mid-teens; (iv) RoCE at 25-30% and RoE>18%. However key monitorable going forward would be management commentary on tractor demand post new industry peak of ~9.4 lakh units achieved during FY23 tracking 4 years of robust monsoon & future margin trajectory amidst stable commodity prices.
Impact
Positive