Analyst Concall
Escorts sees mid-single-digit tractor industry growth FY25
This story was originally published at 22:06 IST on 7 November 2024
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--Escorts Kubota: See India tractor industry sales grow by mid-single digit FY25
--CONTEXT: Escorts Kubota mgmt's comments in post-earnings analyst concall
--Escorts Kubota: Don't see commodity costs rising in big way in near term
--Escorts Kubota: Expect exports to pick up from Jan-Mar
--Escorts Kubota: Expect double-digit growth in tractor sales Oct-Mar
--Escorts Kubota: Harvester segment to be growth driver going forward
--Escorts Kubota: Recorded highest-ever sales Oct on festival season demand
--Escorts Kubota: Industry saw strong sales in eastern region barring Bihar
--Escorts Kubota: See tractor sales in western region pick up in coming mos
--Escorts Kubota: Plan to introduce new crane model
-- Escorts Kubota: Expect UP govt to allot land for new plant over next year
--Escorts Kubota:Preparing revised mid-term business plan; to reveal next yr
By Ketan Barot and Darshan Nakhwa
MUMBAI – Escorts Kubota Ltd. Thursday said it expects growth in tractor sales in the country to be in mid-single-digits in the current financial year ending March. The growth in the domestic tractor industry was flat in the first half of 2024-25.
Addressing a post-earnings conference call, the company management said Escorts Kubota did not perform well on tractor exports during Jul-Sept. The management expects the European market, the largest overseas market for the company, to see growth momentum from Jan-Mar.
The company said the company's first priority is to cater to the Mexican and Southeast Asian markets for which it is developing projects. The company expects products to be ready for the European, Southeast Asian, and Mexican markets by the end of FY25, the company said.
The company saw nominal inflation during the September quarter and does not expect input costs to rise in a big way in the near term. On the company's greenfield tractor plant, the management said discussions with the Uttar Pradesh government have been going well, and the company expects to close a deal on land within the next six months. After the land deal, the company would need two to two and a half years to go live with the commercial production of tractors, the management said. Escorts Kubota withdrew its expression of interest to set up the greenfield plant in Rajasthan after failed discussions, the company said.
The company said the industry witnessed record sales growth in October on the back of the festival season period and other factors like above-average rainfall, higher water reservoir levels, higher crop output and higher minimum selling prices.
The company expects the industry to post double-digit growth in Oct-Mar and mid-single digit growth in FY25.
Escorts Kubota saw an increase in the agricultural equipment portfolio and expects to see positive growth in the next six months and the subsequent year with harvesters leading the growth, the company said.
Escorts Kubota saw positive sales growth in eastern India, especially in Chhattisgarh, Jharkhand, and West Bengal on account of subsidies. Bihar was the only exception, the management said. The company expects the southern and west regions to pick up in Oct-Dec due to above-normal rains. The company saw good sales growth in Maharashtra but expressed slight concern about Gujarat.
In the construction equipment segment, the company expects growth in its crane business and is working on a revised medium-term plan which will be announced next year. The company said there will be new and larger crane models coming out soon. On Thursday, shares of the company closed at INR 3,643.65 on the National Stock Exchange, down 2.9% from the previous close. End
Edited by Saji George Titus
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