Tag: Escorts

Knorr-Bremse Group likely to buy Escorts Kubota’s railway business for over Rs 4,000 crore: Exclusive

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Knorr-Bremse Group, Germany’s largest rail-tech supplier is likely to buy Escorts Kubota’s railway business, sources with knowledge of the matter told CNBC-TV18. The deal is likely to be announced in the next few days.

Escorts Kubota’s railway business is likely to fetch a sum of over Rs 4,000 crore, the sources added.

Knorr-Bremse makes braking and safety-relevant sub-systems for railways and commercial vehicles. Both Knorr-Bremse and Escorts Kubota are major suppliers to the Indian Railways.

CNBC-TV18 has written to Escorts Kubota for a comment and is awaiting a reply.

“As a principle, we do not comment on specific M&A topics,” Knorr-Bremse wrote to CNBC-TV18 in response to the query.

CNBC-TV18 was the first to report on August 29 that the tractor manufacturer Escorts Kubota is considering the sale of its railway business to concentrate on its core tractor business.

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This analyst expects Escorts Kubota shares to cross Rs 5,000 in 12 months; stock near record high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of tractor and construction machinery manufacturer Escorts Kubota Ltd. jumped over 4% on Tuesday after brokerage firm DAM Capital Advisors projected the stock to cross Rs 5,000 over the next 12 months.

DAM Capital gave a ‘buy’ call on Escorts, while raising the price target to Rs 5,100 from Rs 3,150 earlier. The revised price target implies a potential upside of 59% from Monday’s closing levels.

After a meeting the company’s management, DAM Capital noted that Escorts is focussing significantly on synergy creation from its merger with Kubota.

The firm said that the company is likely to see its market share expand through the synergies and the relative strength of both brands in their respective markets.

To recall, Kubota Corporation (Japan) had acquired a controlling stake in Escorts in November 2021 and became a joint promoter in the company along with existing promoters, the Nanda family.

DAM Capital said that Escorts is also expected to see healthy exports growth on account of new products and capitalising on Kubota’s global network.

The company’s margins are also estimated to expand through operational efficiency and localisation, the investment bank noted.

Meanwhile, Escorts Kubota is also boosting revenues from other segments of construction equipment and global material sourcing, while expanding the agri implements business, said DAM Capital.

DAM Capital projects Escorts Kubota to report a Compounded Annual Growth Rate (CAGR) of 17%, 37% and 41% for its revenue, operating profit and net profit respectively, over financial year 2023-2026.

Escorts Kubota’s valuation would expand closer to that of multinational companies, at around 30 times, on the back of healthy earnings growth, higher return ratios and a huge potential of expanding global footprint, according to the brokerage.

Shares of Escorts Kubota are trading 4% higher at Rs 3,323.95. The stock hit a record high of Rs 3,348.45. Shares have risen nearly 60% so far in 2023.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Escorts Kubota aims for 25% export growth as supply chain hassles start easing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Escorts Kubota, a tractor and construction equipment manufacturer, is looking at a significant growth in exports for the fiscal year 2024.

According to Bharat Madan, the Group CFO of Escorts Kubota, the company is expecting a growth rate of 25 percent for exports in FY24 as compared to FY23.

Madan explained that the weaker export performance in April was due to some supply chain issues that the company faced. Despite this setback, Escorts Kubota remains optimistic about the future and is working towards resolving these issues to achieve their export growth targets.

Madan also noted that the festive season in March impacted the company’s sales in April. He stated that April was slower due to the festive season in March and the company anticipates a flat first quarter.

“April was slow because the festive season this time fell in March,” he said.

Also Read | Escorts Kubota misses estimates, profit dips 8%; final dividend at Rs 7/share

Additionally, unseasonal rains have also had an impact on the company’s performance in the current quarter.

“Going forward, the way things are – there will be some impact of the unseasonal rains which has happened in the last two months. So in certain pockets we are seeing that impacting the harvest. But going forward, the expectation is that this quarter can be a flat quarter,” he explained.

However, Madan does not expect significant demand impact on agriculture due to El Nino.

“We don’t see a major impact on the agriculture,” he mentioned.

Also Read | March Auto Sales: Escorts Kubota tractor sales rise 2.3%

Escorts Kubota remains focused on expanding its presence in the global market and is actively working towards increasing its market share. The company is confident about achieving its export growth targets for the fiscal year 2024 and is committed to driving growth through innovation and customer-centric solutions.

The company, on Wednesday, reported an 8.2 percent year-on-year (YoY) decline in consolidated net profit at Rs 185.5 crore for the fourth quarter that ended March 31, 2023.

Also Read | Here is why BofA Securities is negative on India’s two leading tractor manufacturers

In the corresponding quarter last year, the company posted a net profit of Rs 202 crore. CNBC-TV18 Polls had predicted a profit of Rs 178 crore for the quarter under review.

In the March quarter, consolidated revenue stood at Rs 2,183 crore during the period under review, up 16.8 percent against Rs 1,869 crore in the corresponding period of the preceding fiscal. CNBC-TV18 Polls had predicted revenue of Rs 2,198 crore for the quarter under review.

The stock has remained flat for the past week and has gained more than 7 percent over the last month.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Escorts Kubota shares rise after price hikes to take effect from November 16

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Escorts Kubota” isinid=”INE042A01014″ bseid=”500495″ nseid=”ESCORTS” sector=”” exchange=”nse”]

Escorts Kubota Ltd.’s farm machinery division, Escorts Agri Machinery (EAM), will be increasing the prices of its tractors from November 16, 2022.

The company said that the price hike was to offset the impact of the cost inflation in both commodity and other costs. The increase in prices would vary across models and variants.

In an interaction with CNBC-TV18 on Monday, Group CFO Bharat Madan said that the company gained 70 basis points in market share during the September quarter to cross 11 percent. Escorts Kubota’s tractor market share in the first half of the current financial year fell to 9.4 percent from 9.9 percent.

Escorts Kubota Ltd is one of India’s leading engineering conglomerates with diversified business into three different segments — Escorts Agri Machinery (EAM), Escorts Construction Equipment (ECE) and Railway Equipment Division (RED).

Shares of Escorts Kubota are trading 1.5% higher at Rs 1,987.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

After losing market share for a year, this $3 billion tractor giant is on the mend

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Escorts Kubota” isinid=”INE042A01014″ bseid=”500495″ nseid=”ESCORTS” sector=”” exchange=”nse”]

Escorts Kubota has gained market share in the September quarter, the first instance after losing share for nearly a year.

In an interaction with CNBC-TV18, Group CFO Bharat Madan said that the company gained 70 basis points in market share during the September quarter to cross 11 percent. Escorts Kubota’s tractor market share in the first half of the current financial year fell to 9.4 percent from 9.9 percent.

Madan attributed this to the high inflation which impacted the lower-end models to a large extent as the tractor market is very price sensitive.

However, he expressed confidence that the corrective actions taken by the company at the time of losing market share are starting to bear fruit and that market share would be higher in the second half of the current financial year.

Escorts Kubota saw weak performance during the September quarter with its operating profit declining 33 percent from last year to Rs 153 crore while margin dipped to single-digits, witnessing a decline of 540 basis points from the same period last year.

Although Madan believes that margin has hit the bottom for the company, they will take at least 4-5 quarters to return to normal levels.

The company’s construction business volumes declined 14.6 percent from last year to 917 units. Madan attributed that to a higher base last year due to pent-up demand. He further added that the infrastructure story remains intact and that the business will see a recovery as construction activity picks up pace post the monsoon.

Brokerages like CLSA and JPMorgan have also highlighted their worries on the company. While the former has maintained its sell rating and slashed its price target to Rs 1,561 from the earlier Rs 1,612, JPMorgan has said that continued market share losses for the company are a big concern.

Shares of Escorts Kubota are trading 2.6 percent lower at Rs 1,938.1.

Also Read: Shenu Agarwal quits Escorts Kubota, company pledges to be more ‘customer-centric’

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Shenu Agarwal quits Escorts Kubota, company pledges to be more ‘customer-centric’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Farm equipment manufacturer Escorts Kubota Ltd (EKL) on Wednesday (September 21) said Shenu Agarwal resigned from the post of president, agri and construction business, to pursue alternative career interests.

His resignation has been accepted by the company. However, Agarwal will continue to work with the company until the end of November 2022, the company said in an exchange filing.

“We will be shortly announcing the organizational realignment to invigorate the company and position Escorts Kubota Limited (EKL) into becoming one of the leading players in all key domains where we serve,” it said.

Also Read: KPIT Tech acquires 4 companies of Germany’s Technica group — shares rise

“A full replacement for Shenu Agarwal’s role is not envisaged and EKL will become a flatter customer-centric organisation with line-of-sight management,” the company said.

“Shenu Agarwal is not a designated Key Managerial Person as per Companies Act, 2013 and this intimation is being provided as a good governance practice,” it added.

The company registered a 20.35 percent decline in standalone net profit to Rs 147.5 crore in the quarter ending June 30, 2022, compared to a profit of Rs 185.2 crore in the corresponding quarter of the previous fiscal.

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Revenue from operations increased to Rs 2,014.9 crore in the quarter ending June 30, 2022, against Rs 1,677 crore in the same period last year.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Escorts Kubota expects joint venture to be in the black by March 2024

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Escorts Kubota” isinid=”INE042A01014″ bseid=”500495″ nseid=”ESCORTS” sector=”” exchange=”nse”]

Escorts Kubota board approved the amalgamation of Escort Kubota India and Kubota Agri Machinery India into Escorts Kubota Ltd via an issue of EKL shares to Kubota. The amalgamation, the company said, will help increase efficiencies and operations.

Bharat Madan, Group CFO at Escorts expects this joint venture to become profitable by March 2024.

“We expect the capacity utilisation to start moving up now. This year it is going up and next year with the exports increasing, we expect this JV will do well. So by FY24 we expect this JV should be able to be in black,” he said.

He expects the profit to start moving up in another year or two years’ time.

By mid-November, the company will be coming out with a mid-term business plan which will have one of the components as engine localisation.

Also Read: Escorts Kubota shares hit after net profit declines 20% due to inflation

“Localisation will take some time, maybe around two years,” he said.

The utilisation level for the manufacturing JV was below 30 percent last year. “We expect this year utilisation will go up to roughly 40-45 percent and by FY24 it should be somewhere around 80 percent plus,” he said.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Escorts, Eicher Motors, Ashok Leyland, Hero MotoCorp shares slump post July sales data, quarterly results

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Automobile stocks were trading in the red on Tuesday, with Escorts Kubota, Eicher Motors, Ashok Leyland, and Hero MotoCorp falling 2-6 percent.

Escorts Kubota was the worst hit on the Nifty Auto index, down about 6 percent after reporting a lower-than-estimated set of earnings.

Deven Choksey of KRChoksey told CNBC-TV18 that auto ancillaries, commercial vehicle and passenger vehicle companies, the leaders particularly, should be doing reasonably well in the current year, largely because commodity prices have softened.

“In the second half of the financial year, we are likely to see relatively far superior numbers than what we have seen in the last four-eight quarters,” he said.

Automobile companies look really convincing, and with commodity prices down, it is even more reassuring that the profit margins would be maintained for the companies.

Here’s how Escorts performed during April-June:

Also Read | Escorts Kubota shares hit after net profit declines 20% due to inflation

CLSA has downgraded its rating on the tractor maker’s stock to ‘sell’ from ‘buy’ and slashed its target price to Rs 1,612 from Rs 2,069.

The foreign brokerage firm has also cut its earnings estimate by 24-26 percent for FY23-24 because of a lower volume forecast and a 400 basis point cut in operating margin.

A big miss on the margin was a negative surprise, CLSA said while adding that despite the decline in margin, the company has lost market share. However, it also added that Kubota-Escorts synergies are yet to play out.

The second biggest drag was Eicher Motors. Decent July sales also failed to enthuse the Street. Eicher Motors said that the strong growth in commercial vehicle sales was due to a low base. VECV sales in July were up 40 percent year-on-year, while Royal Enfield sales saw a strong growth of 26 percent year-on-year.

Ashok Leyland, Hero MotoCorp and Tata Motors shares were down 1-2 percent. Nomura that says ‘buy’ Ashok Leyland stock believes the motorcycle manufacturer to be a play on the strong upcycle in commercial vehicle space.

It believes commodity tailwind would support margin and highlighted that there had been an improvement in market share in April-June at 30 percent against 27 percent in FY22. The target price has also been raised to Rs 180.

Meanwhile, Morgan Stanley has an ‘overweight’ call on the stock with a target price of Rs 156. It is of the view that commercial vehicle volumes should continue to grow, and added that price hikes and softening commodity prices could drive margin expansion for Ashok Leyland.

Have a look at the sales data for July by Hero MotoCorp:

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Escorts Kubota shares hit after net profit declines 20% due to inflation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Escorts Kubota plunged over 5 percent after the company reported a 20.35 percent decline in standalone net profit for the April-June quarter.

At 10:16 am, shares of the company were trading at Rs 1,619, a 5.95 percent decline from the previous close on the BSE.

On August 1, Escorts Kubota reported its financial earnings for the first quarter of the financial year 2023. Net profit stood at Rs 147.5 for the quarter under review as against Rs 185.2 for the corresponding period last year.

The company said in a regulatory filing that its profit for the quarter was impacted by lower operating profit. Inflation in commodity prices and the industry’s shift towards lower horsepower segments adversely impacted operating profit.

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The company secured an increase in revenue from operations to Rs 2,014.9 from ₹1,677 crore in the corresponding period last year.

Earnings before interest, taxes, depreciation, and amortization (EBITDA), a measure of a company’s overall financial performance, stood at Rs 201.6, a 15 percent year-on-year decline.

The management expects the margin to improve in the next quarters owing to a decrease in commodity prices and the festive season.

“On the margin front like it is mentioned since the benefit of this deflation will start factoring in the next few quarters so hopefully by Q4, when we exit the year we should be back to a normal margin level,”  said, Bharat Madan, Group CFO, Escorts Kubota told CNBCTV18.

Hopefully, by next year in FY24, we should be able to go back to the normal market share levels of the 11.50 percent range, he added.

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Meanwhile, brokerage firm CLSA downgraded the shares of Escorts Kubota to ‘sell’, with a revised target price of Rs 1,612. The brokerage house notes that the big miss on margin led to a negative surprise.

Also, catch all the latest updates from the stock markets with CNBC-TV18.com’s blog

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow