Earnings Outlook
Escorts Kubota Jul-Sept earnings growth seen muted
This story was originally published at 19:59 IST on 5 November 2024
Register to read our real-time news.Informist, Tuesday, Nov. 5, 2024
By Ketan Barot
MUMBAI – Notwithstanding the above-normal monsoon, Escorts Kubota Ltd. is likely to report muted results in the Jul-Sept quarter on lacklustre sales of tractors, analysts said. The agriculture and construction equipment manufacturer's revenue during the quarter will be aided by the merger of Kubota Agricultural Machinery India Pvt. Ltd. and Escorts Kubota India Pvt. Ltd. with the company, they said.
The company is expected to report a net profit of INR 2.56 billion in Jul-Sept, up 9% from a year ago, according to an average of estimates from seven brokerages. The estimates for net profit range from INR 2.24 billion to INR 2.85 billion.
The revenue from operations is seen at INR 22.45 billion, up 10% on year. The estimates range from INR 20.84 billion to INR 24.77 billion.
Sequentially, both net profit and revenue are seen declining 12% and 2%, respectively.
Escorts Kubota's tractor volumes in the September quarter grew 2% on year in Jul-Sept, though the realisation is likely to grow 9% on year, according to YES Securities. Nuvama Wealth Management expects Escorts Kubota's farm division revenue to grow 19% on year, driven by higher realisations. Kotak Institutional Equities sees growth in tractor revenues led by higher average selling prices. But this is likely to be partly offset by a decline in the construction segment due to lower activity, Kotak said.
YES Securities expects earnings before interest, taxes, depreciation, and amortisation, or EBITDA, margin to contract 30 bps and 170 bps on quarter. Escorts Kubota reported EBITDA margin of 14.1% in the June quarter and 12.7% a year ago. Axis Securities also expects the company's EBITDA margin to decline 170 basis points on-year due to negative operating leverage in the engineering and construction equipment and the tractor segment being partly offset by price increases during the year.
The company will announce its results for the Jul-Sept quarter on Nov. 7.
On Tuesday, shares of the company closed at INR 3,706.05 on the National Stock Exchange, down 0.9% from the previous close.
Following are the Jul-Sept earnings estimates for Escorts Kubota, based on reports from seven brokerage houses:
Brokerage | Net Sales (in INR million) | Net Profit (in INR million) | EBITDA (in INR million) |
Anand Rathi Share and Stock Brokers Ltd. | 24,768.00 | 2614.00 | |
Axis Securities Ltd. | 20,840.00 | 2,240.00 | 2,280.00 |
Kotak Institutional Equities | 20,953.00 | 2,571.00 | 2,850.00 |
Motilal Oswal Financial Services Ltd. | 20,904.00 | 2,633.00 | 2,885.00 |
Nuvama Wealth Management Ltd. | 24,326.00 | 2,571.00 | 2,946.00 |
Sharekhan Ltd. | 23,590.00 | 2,850.00 | |
Yes Securities (India) Ltd. | 21,734.00 | 2,454.00 | 2,738.00 |
Average | 22,445.00 | 2,562.00 | 2,740.00 |
End
Edited by Saji George Titus
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