Tag: tractor

Farm Bill: Tractor set on fire at India Gate

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

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Around 15-20 people set a tractor on fire at India Gate here on Monday morning, police said. The incident comes amid protests by farmers and opposition parties across the country over the contentious farm legislations that were passed by the Parliament last week.

According to fire officials, they received information regarding the incident at 7.42 am and two fire tenders were rushed to the spot. ”About 15-20 people had gathered around 7.15-7.30 am and tried to set a tractor on fire. The fire has been doused off and tractor was removed.

”Legal action is being taken in the matter. Identity of the persons involved is being ascertained,” Deputy Commissioner of Police (New Delhi) Eish Singhal said.

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

This stock doubled Rs 1 lakh in just 3 months

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

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Dramatic shift of demand was witnessed during the nationwide lockdown this year. The demand for food items and agriculture rose, placing the focus back on the rural India. All stocks related to the agriculture industry soared but one stock outperformed all of them, especially the auto index.

India’s leading tractor manufacturer Escorts remained the only auto stock that doubled investors’ wealth in three months. In fact, the agri stock remains on most brokerages radar given its continued growth and sales.

The stock zoomed 113 percent since March lows to current levels. It means that if you had invested Rs 1,00,000 in the stock before March this year, you would’ve reaped a total profit of Rs 2,13,000 by now.

Valuation-wise, Escorts is trading at attractive levels, with P/E of 28.37x and return-on-equity (RoE) at 16.75 percent.

Moreover, Escorts’ shares hit a lifetime high today, at 1,118.7 per share on the NSE.

Strong demand and sales growth remains the primary reason behind the massive rally in stock.

June Sales

In June, the company reported strong sales growth of 21.2 percent to 10,851 units from 8,960 units in the same month last year. The sales were significantly higher by 64.5 percent from that in May.

“We have seen unprecedented demand in this month. The industry is expected to grow significantly backed by pent-up demand of the lockdown period, better farmer sentiment due to good monsoon prediction reflected in better than normal Kharif sowing, better rural cash flows owing to record crop output and crop prices, and reasonably good availability of retail finance,” the company said in a regulatory filing.

Brokerages View

Among brokerages, Edelweiss has placed a long-term bet on Escorts, with target price at Rs 1,332.

“Given the strong traction in the rural economy on the back of a bountiful crop
season last year, supported by increase in the minimum support price (MSP), expectation of a plentiful monsoon this year and healthy reservoir levels, we expect the start of next tractor upcycle to last for another two years,” noted the brokerage.

It further added that no major near-term capex and purchase of stake from Kubota will improve cash flows and strengthen its balance sheet.

The rural sentiment is likely to reflect in tractor sales, which likely normalised to pre-pandemic levels in June, said analysts from Nomura, Emkay and Motilal Oswal.

Rural India also led the recovery in car and two-wheeler sales, as urban demand remained muted, added the brokerages in their respective reports.

Investors and Mutual Funds

Not just brokerages, ace investor Rakesh Jhunjhunwala also remained bullish on the stock. At the end of March 31, 2020, the investor held 91 lakh shares or 7.42 percent stake in Escorts. He invested 50 lakh shares in Escorts in the September 2013 quarter.

Apart from the ace investor, 28 mutual funds also held 1.21 crore shares worth to 9.94 percent stake for the quarter ended March 31, 2020.

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

Demand for two-wheeler and passenger vehicles returning; long road ahead for CVs

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

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As the Indian automobile industry has restarted operations partially, a gradual recovery for the sector is expected from the second half of FY21 after witnessing almost zero sales in April due to the complete lockdown. There is a resurgence in inquiries seen for two-wheelers and passenger vehicles (PV), but the commercial vehicle (CV) segment is seeing negligible demand, Motilal Oswal said in a report.

“While demand for two-wheelers and PVs is seeing some recovery from semi-urban and rural markets, CVs have minimal demand due to low economic activity and cautious financiers as many operators have already opted for moratorium. Also, financiers currently are stringent and highly risk averse in lending to CVs or three wheelers,” the report by the brokerage firm read.

The near-term demand outlook for the auto sector is weak as analysts see a gradual restoration of normalcy post lifting of the lockdown.

In May, the brokerage estimates wholesale volumes to decline around 77 percent for 2-wheelers, 77 percent for PVs and 90 percent YoY for CVs due to the lockdown and low demand. Tractors volumes are expected to decline by around 71 percent, YoY.

It expects gradual recovery from H2FY21, which should be led by the festive season.

“With multiple moving parts in the form of normalization of supply side, consumer sentiment, availability of finance, and impact of BS6 cost inflation, demand normalization in 2HFY21 is the biggest monitorable,” the brokerage house said.

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For April 2020, most OEM plants were operating at less than 30 percent average utilisation while less than 50 percent dealer outlets were operational (except tractors which had 60-70 percent operational dealerships).

The report suggests that demand for two-wheelers is returning, driven by a preference for personal vehicles rather than public transport, and higher disposable income in rural markets due to good harvest. While this could be an initial spurt in demand, sustenance of the same is a key monitorable.

Sales of passenger vehicles have recovered slightly post the gradual lifting of lockdowns largely due to the conversion of pre-lockdown bookings, the report said.

The CV segment is the hardest hit due to low economic activities. Channel checks done by Motilal Oswal Financial Services suggest that MHCVs have seen marginal demand only from the construction segment and are not expected to recover before the festive season. This is due to BS4 pre-buying in 4QFY20, price hike of 16-18 percent on BS6, depressed fleet utilization, and stringent financing norms.

The brokerage CV wholesales to decline 91 percent for Tata Motors and 92 percent YoY for Ashok Leyland.

The Tractor segment was better off than others due to good Rabi harvest, robust reservoir levels and forecast of normal rains supporting demand along with comparatively relaxed lockdown norms, which has supported supply, the report added. It expects tractor volumes to decline 70 percent YoY for M&M and 75 percent for Escorts due to supply-side constraints.

“Valuations appear attractive across companies, but given the uncertain macro environment and threat of the possible prolonged impact of Coronavirus, we prefer stocks offering higher visibility of demand recovery, better competitive positioning, scope of higher operating leverage and strong balance sheet,” the brokerage said.

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

Escorts February tractor sales rise 18%, shares surge

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

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Shares of Escorts Ltd rallied over 10 percent on Monday after the company registered a growth in total tractor sales in the month of February 2020.

The Escorts led Agri Machinery Segment (EAM) reported 18.8 percent rise in total tractor sales in February at 8,601 units as against 7,240 units sold in February 2019.

Domestic tractor sales during the month at 8,049 tractors registered a growth of 16.3 percent as compared to 6,918 tractors sold in February 2019.

Export for the month of February 2020 also rose by 71.4 percent to at 552 units versus 322 units, YoY.

The scrip touched intraday high of Rs 863.75 after surging 10.72 percent on the BSE and at 11 am, the stock was trading 9.90 percent higher at Rs 857.30.

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

Escorts will see 10% volume growth in Q4, says CFO Madan

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

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Farm equipment and engineering major Escorts reported a 52.34 percent increase in standalone net profit at Rs 140.11 crore for the third quarter ended December 2018.

Bharat Madan, group CFO of Escorts, spoke to CNBC-TV18 about the company’s financial performance and growth outlook.

“We had given a guidance for the full year earlier at 12-14 percent range. If you look at our performance last quarter, it was pretty good, we have grown 34 percent and we are expecting the industry to grow in that range 25-30 percent which didn’t happen in the last quarter, which actually led to some correction happening now in the full year guidance. However, we can assure you from Escorts side, we are still going to do better than the industry numbers. We expect we should be able to deliver better growth in Q4,” Madan said on Tuesday.

Talking about the company’s outlook, Madan said, “Looking at the first nine months, we had done almost double of what the industry has done. So if the industry has grown to about 13 percent, we have growth 25 percent. We expect fairly the same momentum will continue in this quarter as well,” he added.

“Last year we had seen the Q4 numbers had grown by 49 percent, which is a very huge growth we saw last year. So base is already very high and partly also because some of the festive season used to fall normally in March but this time it should shift to April first week. So that is why we expect that the next six months should be good for the industry. We don’t think there is any reason for worry as such specially in strong market,” said Madan.

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