Buy Escorts; target of Rs 4000: Emkay Global Financial

BUY

Emkay Global Financial's research report on Escorts

Escorts (EKL) logged a strong Q3 with 8.5% growth in revenue from continued operations and 110bps QoQ EBITDA margin expansion to 11.4%. EKL has guided to robust domestic tractor industry outlook for 4Q (~15% YoY growth). This, coupled with management guidance on corrective actions for channel inventory/dealer receivables being largely over, with several new product initiatives (Pro Maxx Series tractors under the FarmTrac brand) and scale-up in the captive financing arm, would drive market-share improvement in FY26 (particularly from H2). Additionally, component exports to Kubota as part of the parent’s global sourcing diversification (scale-up in FY26E; Kubota’s annual global sourcing is ~USD10-12bn) would act as a long-term catalyst for the stock as well, apart from optionality around domestic tractor industry market share gains. FY25E/26E EPS is largely unchanged.

Outlook

We maintain BUY on the stock with unchanged TP of Rs4,000, at 30x Dec-26E PER.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Escorts_11022025_Emkay