(Reuters) -India’s Escorts Kubota reported a 6% rise in second-quarter profit on Tuesday, as strong tractor demand outweighed pressure from higher input costs.
The tractor maker’s standalone net profit from continuing operations increased to 3.21 billion rupees ($36.52 million) in the September quarter from 3.03 billion rupees a year earlier. Revenue from operations climbed 22.6% to 27.77 billion rupees.
Higher raw material costs pushed up overall expenses by 18%, trimming margins.
KEY CONTEXT
India recorded above-average rainfall during the June to September monsoon season, lifting rural sentiment and tractor demand.
Industry-wide tractor sales rose about 28% year-on-year in the September quarter, according to data from the Tractor Manufacturers Association.
Escorts Kubota’s tractor sales rose 30% in the same period, helped by above-normal rainfall and higher reservoir levels, the company said last month.
Lower discounts and new product launches likely lifted Escorts’ average selling prices, Ambit Capital said in a pre-earnings note.
PEER COMPARISON
Valuation Estimates (next 12 Analysts’ sentiment
(next 12 months)
months)
RIC PE EV/EBI Revenue Profit Mean # of Stock to Div
TDA growth(%) growth(% rating* analyst price yield
) s target** (%)
Escorts Kubota 31.76 26.08 10.71 7.39 Hold 10 1.10 0.75
Mahindra and 27.08 24.29 13.90 16.59 Buy 31 0.92 0.72
Mahindra
Tata Motors 7.11 3.04 3.96 -9.51 Hold 26 0.60 1.45
Passenger Vehicles
Eicher Motors 34.41 32.01 16.30 14.72 Buy 28 1.11 1.02
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPT STOCK PERFORMANCE
— All data from LSEG
— $1 = 87.8950 Indian rupees
(Reporting by Aleef Jahan; Editing by Subhranshu Sahu)
