Motilal Oswal Financial Services neutral on Escorts Kubota

Motilal Oswal Financial Services has neutral call on Escorts Kubota with a target price of Rs 1875. The current market price of Escorts Kubota is Rs 2140.05.

Escorts Kubota, incorporated in the year 1944, is a Mid Cap company (having a market cap of Rs 28251.12 Crore) operating in Auto sector.

Escorts Kubota key Products/Revenue Segments include Tractors Agricultural, Other Operating Revenue, Scrap, Sale of services and Export Incentives for the year ending 31-Mar-2022.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 1968.85 Crore, down -4.78 % from last quarter Total Income of Rs 2067.58 Crore and up 13.19 % from last year same quarter Total Income of Rs 1739.36 Crore. Company has reported net profit after tax of Rs 103.55 Crore in latest quarter.

The company’s top management includes Mr.Nikhil Nanda, Mr.Manish Sharma, Mrs.Reema Rameshchandra Nanavati, Mr.Vimal Bhandari, Mr.Kenichiro Toyofuku, Mr.Ravindra Chandra Bhargava, Mr.Shiro Watanabe, Mr.Seiji Fukuoka, Ms.Tanya Dubash, Mr.Yuji Tomiyama, Mr.Dai Watanabe, Mr.Harish N Salve, Mr.Sunil Kant Munjal, Dr.Sutanu Behuria, Mr.Hardeep Singh, Ms.Nitasha Nanda, Mr.Shailendra Agrawal, Mr.Yasukazu Kamada. Company has Walker, Chandiok & Co.LLP as its auditors. As on 30-09-2022, the company has a total of 13 Crore shares outstanding.

Investment Rationale
The brokerage expects Tractor volumes to grow by ~9% in FY23E, implying a monthly run rate of ~8.1k units, or a 10.5% residual growth. The brokerage estimates a 5% growthin Construction Equipment for FY23E, implying a monthly run-rate of 451 units,or a 5% residual growth.

Promoter/FII Holdings
Promoters held 72.9 per cent stake in the company as of 30-Sep-2022, while FIIs owned 4.24 per cent, DIIs 7.65 per cent.