Construction equipment and auto component maker Escorts may see a 63 percent jump in its net profit and an 11.6 percent increase in revenues for the October-December period due to strong growth in the tractor business on account of good monsoons, says a CNBC-TV18 poll of analysts.
Escorts stock was one of the biggest gainer in 2013. It rallied from Rs 68 to a life-time high of Rs 145 in December 2013. However, in the last one month, it has seen some profit taking.
According to poll estimates, though the company’s fundamentals are very strong, like the core tractor business, others like auto ancillaries and railway are still reeling under pressure.
The strong momentum in tractor sector will be continued in Q3 as well. Tractor capacity utilisation has increased to 75 percent, thus operating leverage will lead to 120 basis points Q-o-Q jump in EBITDA margins to 8 percent.
Escorts volumes rose 28 percent sequentially to 19,050 units in the quarter ende December 2013. Construction equipment, auto ancillary and railway equipment businesses continue to remain muted with low offtake.
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