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Escorts share price up 2% on rise in Q4 profit; Kotak expects tractor industry revival in FY21

For the full fiscal, the company posted a consolidated net profit of Rs 471.7 crore compared to Rs 477.9 crore in 2018-19.

May 15, 2020 / 10:19 AM IST
 
 
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Escorts share price was up almost 3 percent in the morning session on May 15, a day after the farm and engineering equipment maker reported a 9.71 percent increase in consolidated net profit at Rs 127.73 crore for the fourth quarter ended March 31, 2020.

The stock, which has jumped 11 percent in the last five days, was quoting at Rs 821.80, up Rs 27.50, or 3.46 percent at 0950 hours.

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The company's income declined to Rs 1,415.95 crore during the fourth quarter as against Rs 1,668.72 crore in the corresponding period a year ago, Escorts said in a statement.

For the full 2019-20 fiscal, the company posted a consolidated net profit of Rs 471.7 crore as compared with Rs 477.9 crore in 2018-19. Total income for 2019-20 fiscal stood at Rs 5,907.69 crore as compared with Rs 6,354.42 crore in 2018-19.

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Chairman Nikhil Nanda said there was a serious impact of the coronavirus pandemic on the industry and business operations and it would take some time to regain normalcy.

"This quarter reflects partial impact but we are preparing ourselves to set new norms through reinventing, innovating and digitising our ways to engage and connect stakeholders for the business operations ahead even as the uncertainty of affairs still exist," he added.

Brokerage firm Kotak Securities has a buy on the stock, with target of Rs 1,080 per share. It expects the tractor industry to revive in FY21 led by a normal monsoon and an increase in minimum support price (MSP) of Rabi crops, which is expected to boost rural income.

"We believe the partnership with Kubota can open up significant potential for exports for Escorts Ltd. Over the last few years, Escorts has gained share in states where it has a relatively strong presence," Kotak said.

The brokerage expects Escorts’ tractor volumes to grow at a 4 percent CAGR over FY19-22E and EBIT margins to remain stable nearly 12-13 percent in the same period.

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According to Moneycontrol SWOT Analysis powered by Trendlyne, Escorts has low debt with zero promoter pledge.

The stock price is showing strong momentum with price above short, medium and long-term moving averages.

The technical rating is bullish on the back of moving averages and other indicators.

Disclaimer: The views and investment tips expressed by experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandip Das
first published: May 15, 2020 10:19 am

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