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Informist, Friday, May 8, 2026

 

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--Escorts Kubota: See growth in tractor segment flat FY27, to rebound FY28
--CONTEXT: Comments by Escorts Kubota CFO Madan in interview to Informist
--Escorts Kubota: Will export tractors to North American markets
--Escorts Kubota:See maximum growth for co's tractor exports in North America
--Escorts Kubota: To launch more tractors in South to aid paddy crop
--Escorts Kubota: Will cater to 80-85% tractor mkt needs with new launches
--Escorts Kubota: Will improve mkt shr by 1?ross co's three tractor brands
--Escorts Kubota: FY27 has started with lot of headwinds for industry
--Escorts Kubota: Price hikes due to rising costs to negate GST cut benefits
--Escorts Kubota: Margins of construction equipment to remain under pressure

 

By Anand JC and Gopika Balasubramanium

 

MUMBAI – Agricultural machinery major Escorts Kubota Ltd. expects to improve its market share by 1%  each year starting 2026-27 (Apr-Mar) across its three brands, including Power Trac and Farm Trac, for the next 4-5 years, Whole-time Director and Chief Financial Officer Bharat Madan told Informist. The company's market share has hovered around the 10-12% mark since at least FY12.

 

"The idea was actually being in the number 2 position in the next 4-5 years, but there is no specific market share number which is in mind," Madan said. Mahindra & Mahindra Ltd. currently rules the roost with a domestic market share of around 40%, followed by Chennai-based Tractors and Farm Equipment Ltd., or TAFE, with a share of around 17%, and Sonalika Tractors with 13%, according to data from the Tractor Manufacturers Association. Escorts Kubota closed FY26 with a market share of 11%, the company said in its investor presentation.

 

Madan said the company lost market share in FY26 owing to regional disparities and limited availability of new models in key markets. Forecasters have predicted a weaker monsoon this year, which the company expects will affect the western and southern markets more, being more dependent on rains for irrigation. "It is a blessing in disguise for our company because we are focused more on northern and central markets right now, where market shares are higher, so that will help in improving overall market share," Madan said.

 

In addition, the company has launched tractors tailored for specific applications, which the company hopes will arrest the decline in its market share. "We will supplement that portfolio further in another 2-3 months' time," the chief financial officer said. "Other launches will happen to (add) more strength in the portfolio for paddy." With the launch of these products, Escorts Kubota's tractor portfolio will address around 80-85% of the market's needs, he added.  

 

GROWTH PROSPECTS

Domestic tractor industry volumes grew almost 19% on year in the first six months of FY26 on a favourable monsoon and 28% in the second half following the cut in goods and services tax, according to the Tractors Manufacturers Association. In FY26, Escorts Kubota's tractor sales in India grew 15%, compared to the 23% growth registered by the industry.

Escorts Kubota's management expects the tractor industry to see flattish growth in FY27, in the range of (-)2% to (+)3%. This sober expectation is driven by "a lot of headwinds" going into FY27, such as the war in West Asia, disruption in supply chains, and surging input costs. If the demand for tractors reduces this year for a variety of reasons, the industry may also see a rise in discounting, Madan said.

"I think all factors today are looking a bit negative," he said. "Which is why we are seeing a lot of headwinds for FY27. If FY27 is a flat year (in terms of volume uptakes), it will actually be very good." The reason for that counterintuitive stance: growth may bounce back in FY28.

The company exported 6,676 tractors in FY26, up 34% on year. Escorts Kubota will open up exports to North American markets in FY28, where it expects to see the "maximum growth". The company currently exports mainly to Europe, Africa, and Asia.

INPUT NIGHTMARE

Concerns around the rising cost of commodities have dominated commentaries from automobile companies so far in the current earnings season. "Cost-wise, I think all commodities are going up, because of the crude (oil) issues... all things are getting affected," Madan said. "In addition to that, you've got the impact on the metals."

Prices of ferrous and non-ferrous metals, such as steel, copper, and aluminium, have all increased. "We are not seeing any commodity where the impact is not felt," the chief financial officer said. "The cost increases across all, and varies from 5-7% to up to even 16-20%... for the entire sector, the cost increase is quite high."

Escorts Kubota increased prices of its products by 1-2% in April, but the company said this was a routine price hike and not one aimed at addressing the current surge in input costs. It may be forced to raise prices again should the war continue for long, Madan said. "The cost pressure building up on the input side, if it continues, we will have to pass it on to the market, which will actually suppress the demand," he said, adding that such a move would negate the benefits provided by the GST cut in late 2025.

Escorts Kubota operates in the agricultural machinery and construction equipment businesses. The company divested its railway division in late 2024. Madan said the margins of its construction equipment business are under pressure because of rising input costs. "We have not been able to pass on 100% (of inflation in commodity prices)," he said. "We have only been able to pass on 20-30% of the cost increases. So, that will keep the margins a bit under pressure."

The segment has benefited from the government's infrastructure push in recent years. But "given the current situation, the government's fiscal situation may come under pressure," Madan said. "There may be a negative impact... which can actually lead to a big slowdown on the infrastructure spending from the government side." However, if the government is able to keep its plans intact, the construction equipment business may report growth in FY27, Madan said.

For the March quarter, Escorts Kubota reported a net profit of INR 3.25 billion on a revenue of INR 29.51 billion. Friday, its shares ended 6% lower at INR 3,146.60 on the National Stock Exchange.  End

Edited by Rajeev Pai

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