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December quarter analyst call: Escorts may increase prices in Q1FY22, expects growth in exports

Earnings before interest, tax, depreciation and amortization (EBITDA) rose 71.5% at Rs 364 crore against Rs 212.2 crore and margin was at 18.1% versus 13%.

February 03, 2021 / 12:23 PM IST
 
 
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Escorts has reported 83 percent jump in its December quarter net profit at Rs 280.7 crore against Rs 153 crore in year-ago period, while revenue was up 23 percent at Rs 2,017.4 crore versus Rs 1633.44 crore.

Earnings before interest, tax, depreciation and amortization (EBITDA) rose 71.5% at Rs 364 crore against Rs 212.2 crore and margin was at 18.1% versus 13%.

Here are the highlights from Escorts' Q3FY20 earnings call as compiled by Narnolia Financial Advisors:

The company is seeing good traction and green shoots of demand; the same momentum of demand is expected to continue, going ahead.

Profit share of associates denotes income form Kubota of Rs 6.96 crore.

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The company has total of 1090 dealers as of now.

Inventory buildup is done across the industry but still not at pre-covid levels. Company has inventory level better than the industry.

Industry inventory level has been reduced to 25 days from previous level (pre-covid) of 35 days.

The company’s overall market share for YTD has declined because of decline in MS of 30-40HP segment although 40-50HP segment’s MS has grown positively for same period.

Current levels of market share are not comparable as it was majorly driven by availability of products and supply chain issues.

There is no impact of ongoing farmers protest on domestic tractor industry.

Supplies are majorly on track except for fuel injection pumps there is some constraint for the company.

Overall RM inflation is expected to be in range of 500 bps for 3QFY21 and 4QFY21.

In mid of November 2020, the company took price increase of 2% to partially set of the commodity inflation and next price increase may be taken in 1QFY22.

The contribution of sales from higher HP tractor has reduced from 63% in 2QFY21 to 61% in 3QFY21.

Discounting is currently at very low levels as against usual levels across the Industry.

Railway segment revenue of the company is expected to remain flat for FY21.

Significant growth in exports expected in FY21 over FY20 numbers and the company is further targeting higher number in FY22 considering strong Kubota numbers. In next 7-8 years the company is targeting to triple exports number from current level.

For the company, South and West will continue outperform North and East markets in India.

E-Kubota is destined for international markets, where Escorts tractor would be re-designed by Kubota, as per the agreement.

E-Tractor is for India markets, expected to be brought in market by next 3-6 months.

The company is making investments in existing plants majorly it is on machining side and suppliers side. The company is hoping to get capacity of 12,000-13,000 tractors a month form mid of FY22.
Moneycontrol News
first published: Feb 3, 2021 12:23 pm

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