Buy Escorts; target of Rs 4700: Emkay Global Financial

Emkay Global Financial's research report on Escorts

The recently-concluded monsoons saw ~8% increase over the long period average, lifting the outlook for the upcoming crop cycles. Additionally, with the industry base turning favorable (de-grew 13% YoY in H2FY24 and is flattish in FY25YTD), we believe tractors would enter an upcycle from H2FY25. Escorts is working on multiple initiatives spanning products, channel, and capacity to address opportunities in India and export markets, with Kubota’s intent to increase sourcing from India as a key mid-tolong term driver (present global component sourcing is at ~USD10-12bnpa). Our EPS estimates are broadly unchanged; we build-in 16% EPS CAGR in FY25E27E. At CMP, the stock trades at ~26x core Sep-26E PER vs ~30x for M&M.

Outlook

We upgrade Escorts to BUY from ADD with revised TP of Rs4,700/sh at 30x Sep26E PER (rolled over) + Rs320 cash/sh.

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