Escorts Q4 preview: Brokerages expect robust profit growth; EBITDA margin may contract
Emkay Global Financial Services expects Escort's standalone revenues to grow 16% YoY to Rs 1,660 crore driven by steady growth in tractors and construction equipment volumes
May 07, 2019 / 08:35 AM IST
Tractor manufacturer Escorts is likely to report its fourth quarter earnings on May 7. The company said it reported 14.9 percent decline in its tractor sales at 5,264 units in April. It sold 6,186 units in the same month last year.
Domestic sales last month were down 18.2 percent at 4,986 units as against 6,094 units in the year-ago period, it said.
According to brokerage Sharekhan, Escorts may report net profit of Rs 137.6 crore, up 22.3 percent year-on-year or 6.5 percent quarter-on-quarter. It expects 15.1 percent YoY growth in net sales at Rs 1,652.5 crore.
Emkay Global Financial Services expects Escort's standalone revenues to grow 16 percent YoY to Rs 1,660 crore driven by steady growth in tractors and construction equipment volumes.
The firm expects revenues from railways to grow 20 percent YoY while it projects a contraction in EBITDA margin to 12 percent. Emkay builds in 20 percent yearly growth in Profit after Tax (PAT) to Rs 130 crore.
Motilal Oswal also expects similar growth in profit. It projects EBITDA margins to contract 30bps YoY (-30bp QoQ) to 11.8 percent. EBITDA is expected to increase 13.4 percent YoY (-1.7 percent QoQ) to Rs 197 crore.
Narnolia Financial Advisors expects revenue to grow 18.3 percent YoY largely driven by double-digit growth in agri-machinery, construction equipment and railways segments.
Key things to watch for:
-Changes in market share and new launches in the tractor segment
-Demand momentum in the construction equipment segment
-Visibility of order book execution in railways division