Buy Escorts; target of Rs 1900: ICICI Direct

ICICI Direct's research report on Escorts

Escorts is India’s fourth largest tractor maker (11.3% FY21 market share) and also serves the domestic construction equipment, railways space. FY21 sales mix – tractors 82%, construction equipment 11%, railways 7% Past five year’s CAGR: 44.9%, 59.8% in EBITDA, PAT; cash positive b/s

Outlook

We upgrade Escorts to BUY amid robust capital efficiency, net cash b/s We value Escorts at revised SOTP-based TP of Rs 1,900 (20x P/E on core FY23E EPS, 20% discount on treasury shares; previous TP Rs 1,325)