Earnings Outlook
Escorts Kubota Q1 sales, PAT seen declining on year
This story was originally published at 13:12 IST on 4 August 2025
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By Reshma Ravi
MUMBAI – Escorts Kubota Ltd. is expected to report a decline in its net profit and net sales for the June quarter, primarily due to a fall in revenue from the construction equipment segment which was impacted by changes in emission norms. Revenue from the tractor segment is expected to see only modest growth, insufficient to offset the drag from the construction business, according to brokerages tracking the company.
The company is expected to report a net profit of INR 2.9 billion for the June quarter, down 5% on year and 3% on quarter, according to the average of the estimates of six brokerage firms. The highest estimate for the company's net profit is INR 3.20 billion by Nuvama Wealth Management Ltd. and the lowest estimate is INR 2.63 billion by InCred Research Services Pvt. Ltd.
The company is expected to report net sales of INR 25.61 billion, down 9% on year but up 5% on quarter. The highest estimate for net sales is INR 26.10 billion by Motilal Oswal Financial Services Ltd. and the lowest is INR 24.64 billion by Kotak Institutional Equities.
The company's net sales are expected to be affected mainly due to the decline in its construction equipment segment revenue. The low demand is linked with changes in emission norms, which disrupted demand as dealers focused on clearing older inventory.
While the tractor segment is expected to see modest growth, it will not be strong enough to offset the downturn in the construction segment. This will also affect profitability, as the company faces high raw material costs, negative operating leverage, and pressure on margins. The company is also underperforming compared to its peers in the tractor segment.
"We expect revenues to decline by 4% on year in 1QFY26 (Apr-Jun), led by 21% on year decline in construction segment revenues due to emission norm changes, resulting in a 24% on year decline in volumes," Kotak said.
New launches are expected in markets such as Mexico, Myanmar, Cambodia, and Thailand in the June quarter with the aim of 20-25% exports growth in FY26.
"In FY26, the domestic tractor industry is expected to grow by mid to high single digit, led by good yield for rabi harvest, higher crop realisations, sufficient water in reservoirs and normal monsoon. The target the company is to grow in line with the market, though limited by the adverse regional mix," Anand Rathi Share and Stock Brokers Ltd. said.
Escorts Kubota is expected to report earnings before interest, tax, depreciation, and amortisation of INR 3.13 billion, according to the average of five estimates. The highest estimate for EBITDA is INR 3.25 billion from YES Securities (India) Ltd. and the lowest is INR 2.95 million from Kotak.
"EBITDA margin is expected to decline by 40 bps on year mainly because of negative operating leverage in the construction equipment segment and steady profitability in the tractor business," Kotak said. The broking firm estimates an EBIT margin of 11.5% in the tractor business in the reporting quarter compared to 11.7% a year ago.
At 0947 IST, shares of Escorts Kubota was at INR 3,263 on the National Stock Exchange, down 0.8% ahead of the earnings on Monday. The stock is up over 2% since the company reported its March quarter earnings on May 8.
Of 11 brokerage reports available on the company with Informist, four have a 'buy' recommendation with an average target price of INR 3,614 and four have a 'hold' rating with the average target price of INR 3,351 and three have a 'sell' recommendation.
Following are the June quarter earnings estimates in INR million, based on reports from six brokerages in descending order of the estimate of net profit.
Brokerage | Net sales (in INR million) | Net profit (in INR million) | EBITDA (in INR million) |
Nuvama Wealth Management Ltd | 25,477.00 | 3,195.00 | 3,170.00 |
Motilal Oswal Financial Services Ltd | 26,100.00 | 3.101.00 | 3,210.00 |
YES Securities (India) Ltd | 25,801.00 | 2,886.00 | 3,257.00 |
Anand Rathi Share and Stock Brokers Ltd | 25,755.00 | 2,813.00 | N.A |
Kotak Institutional Equities | 24,642.00 | 2,667.00 | 2,954.00 |
InCred Research Services Pvt Ltd | 25,903.00 | 2,634.00 | 3,057.00 |
Average | 25,613.00 | 2,882.67 | 3,129.60 |
End
Edited by Avishek Dutta
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