ICICI Direct's research report on Escorts Kubota
The company is a prominent tractor maker domestically (10.3% FY22 market share). It also serves domestic construction equipment, railways space. FY22 sales mix – tractors 77%, construction equipment 14%, railways 9% • Past five year CAGR: 24.1%, 35.6% in EBITDA, PAT; cash positive b/s.Escorts Kubota passed a resolution to amalgamate Escorts Kubota India Pvt Ltd (EKI, JV between Escorts & Kubota in 40:60 ratio, tractor manufacturing entity) & Kubota Agriculture Machinery Pvt Ltd (KAI, JV between Escorts & Kubota in 40:60 ratio, including all farm machinery presence of Kubota in India) into Escorts Kubota Ltd for swap ratio of 5:129 & 5:220, respectively • In FY22, EKI & KAI had revenue of Rs 689 crore & Rs 1820 crore, respectively. EKI incurred a loss of Rs 96 crore while KAI generated profit of Rs 53 crore • This comes in line with the earlier announcement made at the time of Kubota acquiring a further stake in the company and joining as co-promoter. It is aimed at simplifying the group structure with listed entity now including Kubota’s complete presence in India.
We await b/s of merged entity before incorporating the same in our financials. Keeping the standalone financials intact (erstwhile Escorts) & assuming to be merged entities operating unchanged, we value EscortsKubota on SOTP basis at Rs 2,390; valuing it at 25x PE on combined PAT in FY24.
At 17:30 Escorts Kubota was quoting at Rs 2,086.45, up Rs 156.55, or 8.11 percent.
It has touched an intraday high of Rs 2,122.85 and an intraday low of Rs 1,924.05.
It was trading with volumes of 179,432 shares, compared to its thirty day average of 33,544 shares, an increase of 434.92 percent.
In the previous trading session, the share closed down 3.55 percent or Rs 71.00 at Rs 1,929.90.
The share touched its 52-week high Rs 2,122.85 and 52-week low Rs 1,400.00 on 19 September, 2022 and 30 June, 2022, respectively.
Currently, it is trading 1.71 percent below its 52-week high and 49.03 percent above its 52-week low.
Market capitalisation stands at Rs 27,528.75 crore.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.