Buy Escorts; target of Rs 415: Karvy

Karvy's research report on EscortsCompany is in the process of completing its divestment of major part of its Auto Products business. Its focus is increasing on its core business of Agri Machinery (EAM). It also increases its efforts to expand the most profitable railway business. We believe that company’s recent strategic initiatives in terms of reducing exposure in loss making entities, increasing efforts for expansion of profit making business and more focus on cost rationalization would pay off over next 2-3 years. Escorts’ auto ancillary segment has been bleeding since long, particularly its OEM segment.  Management has planned sale of OEM and exports division of the segment initially, while retaining after sales with company for a year’s period. However, over a period, it would completely exit from its auto parts business. It would sell the plant and machinery while retaining land and building assets for future development. This strategic decision strengthens our positive view on the management’s commitment to enhance the returns by focusing on profitable segment and divesting loss making entities.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.