Limited Period Offer:Be a PRO for 1 month @Rs49/-Multiple payment options available. Know More

Buy Escorts; target of Rs 1020: ICICI Direct

ICICI Direct is bullish on Escorts has recommended buy rating on the stock with a target price of Rs 1020 in its research report dated May 21, 2020.

May 23, 2020 / 12:09 PM IST
  • bselive
  • nselive
Todays L/H

ICICI Direct's research report on Escorts

Escorts is a prominent tractor player domestically with market share in excess of 11%. The company’s brand of tractors is particularly strong in the northern as well as the eastern belt of India. With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as expectation of normal monsoon 2020, we expect the tractor industry to outperform the larger automobile space in FY21E with Escorts a key beneficiary. Escorts in the recent past has also entered into a strategic partnership with Kubota Corporation of Japan (one of the global leaders in farm machinery and implements), which provides further visibility of growth for the company, going forward. On the b/s front, Escorts is a net cash company thereby holding surplus cash on books (~Rs 1,000 crore as of FY20) and also realises healthy return ratios matrix (RoCE at ~20% in FY20), thereby making a compelling case for an upgrade to BUY.


We derive comfort over long term growth prospects amid its healthy B/S and capital efficiency. Therefore, we upgrade the stock to BUY. We value Escorts at Rs 1,020, on SOTP basis, assigning 18x P/E to its core FY22E EPS and ascribing 25% holdco discount to its treasury shares in books.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: May 23, 2020 12:09 pm

stay updated

Get Daily News on your Browser