Hold Escorts: target of Rs 1500: ICICI Direct
ICICI Direct recommended hold rating on Escorts with a target price of Rs 1500 in its research report dated February 03, 2021.
February 04, 2021 / 02:09 PM IST
ICICI Direct's research report on Escorts
Escorts reported robust Q3FY21 results. Total operating income for Q3FY21 came in at Rs 2,017 crore, up 23.5% YoY tracking 25.7% YoY growth in tractor volumes to 31,562 units. Within segments, gross revenue from tractors was at Rs 1,653 crore (up 28% YoY) while construction equipment (CE) revenues grew 13% YoY to Rs 245 crore) and railway equipment division (RED) reported 5.7% YoY revenue decline to Rs 117 crore. EBITDA margins came in at 18% (down 30 bps QoQ), with savings in employee costs and other expenses nearly negating gross margin contraction. Consequent standalone PAT in Q3FY21 came in at Rs 280.6 crore, up 83.3% YoY.
We maintain HOLD rating on Escorts and value it at Rs 1,500 on SOTP basis (unchanged from previous target price; assign 17x P/E on core 23E EPS & 25% holding company discount to treasury shares).
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