Buy Escorts; target of Rs 180: SPA Research

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26 Aug, 2025 12:21

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SPA Research's research report on EscortsEscorts reported tepid set of results with both topline (at INR 8881 mn) and bottomline (at INR 204 mn) coming below our estimates. Increased sale of low HP tractors & ~3% decline in realisation for the CE segment aided decline in revenue and contraction in margins. All the segments have registered degrowth in sales apart from the railway division. After almost 2 years of declining tractor sales, the industry is showing signs of recovery with South and Western markets growing almost 22% YoY. We maintain our BUY rating on the stock with target price of INR 180 based on 6.25x FY17E EV/EBITDA. After almost 2 years of declining tractor sales, the industry is showing signs of recovery with South and Western markets growing almost 22% YoY. We are optimistic on the growth of tractor industry over the next one year. The management's focus on increasing the sale of higher HP tractors is likely to improve the overall realization for Escorts. The outlook for its CE and Railway segment is also promising given the emerging opportunities in the respective sectors which should provide further boost to profitability. We expect top line & bottom line to grow at a CAGR of 6.9% & 51.9% respectively between FY15- 17E. We maintain our BUY rating on the stock with target price of INR 180 based on 6.25x FY17E EV/EBITDA. For all recommendations, 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.