Motilal Oswal's research report on Escorts Kubota
1QFY24 results were better across all fronts, led by multiple levers, such as better ASPs, gross margin benefits, and cost-control measures. Consequently, EBITDA margin came in at 14% (vs. est. 10.8%). The management has guided for i) low-mid single-digit tractor volume growth in FY24E and ii) sustenance of EBITDA margin for the coming quarters. We raise our FY24E/FY25E EPS by 21.4%/9.3% to factor in for margin expansions and high ‘other income’. Moreover, we have increased our target multiple to 22x Sep’25E EPS (vs. 20x earlier).
Outlook
We retain our Neutral stance on the stock with a TP of INR2,450.
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