February 13, 2017 / 16:54 IST
ICICI Direct's research report onEscorts Escorts’ Q3FY17 results were above our estimates on topline, margin front but below estimates on bottomline front. Revenues were at Rs 1093 crore, up 22.6% YoY, 2.2% QoQ, marginally above our estimate of Rs 1080 crore. Revenue from agri machinery was at Rs 889 crore (estimate Rs 889 crore), railway equipment- Rs 58 crore (estimate: Rs 58 crore) & construction equipment Rs 152 crore (estimate Rs 134 crore).
Outlook
We believe the winners of the overall auto space are companies with superior delivery of earnings as investors seek comfort in auto companies on the earnings front. Thus, we feel Escorts needs to deliver a consistent improvement in earnings before warranting an upgrade in our recommendation. Thus, we value the stock at 16x FY18E DEPS to arrive at a target price of Rs 405. We have a HOLD recommendation on the stock.
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