Buy Escorts; target of Rs 92: SPA Research

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26 Aug, 2025 12:21

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SPA Research is bullish on Escorts and has recommended buy rating on the stock with a target of Rs 92 in its February 5, 2013 research report.
 
“Escorts reported net sales of INR 10282 mn, up by 0.2% YoY & 24.9% QoQ. EBITDA margin expanded by 210 bps YoY to 5.07%, on the back of lower COGS partly offset by higher employee cost. Tractor volumes have gone up by 32.1% QoQ to 17106 units. Despite being in the negative territory, auto ancillaries segment has seen some improvement in margin levels, whereas railway equipment segment and construction equipment segment remained under pressure. We continue to retain our "BUY" recommendation.”
 
“Net sales from the auto ancillary segment stood at INR 375 mn, up by 20.6% YoY & 23.4% QoQ. EBIT margin at -6.29%, up by 1122 bps YoY & 515 bps QoQ, has continued to be in the negative territory. The segment is under performing due to low capacity utilization levels coupled with pressures on the input cost front. EBITDA margin expanded by 210 bps YoY to 5.07% on the back of lower COGS (72.5% of sales in Q1FY13 against 74.7% of sales in Q1FY12) partly offset by higher employee cost. PAT margin expanded by 202 bps YoY and 58 bps QoQ to 2.81% led by increased EBITDA margin and lower interest cost.”
 
“We expect the tractor industry to register a CAGR of 14% over FY13-16E. Escorts is well placed with the introduction of its new products in higher HP tractors segment and commercial tractor segment. The company's focus on increasing its market share in higher margin high HP tractor segment will augur well for the company. We expect the topline & bottomline to register a CAGR of 20% & 55% over FY12-FY14E on account of its recent initiatives of launching new products, increasing dealer network, turning around of construction business and expected rebound of railways segment. We retain our "BUY" recommendation with a target of INR 92 in 15 months at 5x FY14E EV/EBITDA,” says SPA Research report.

Public holding more than 90% in Indian cos

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