Escorts Kubota’s share price zoomed 5.5% to Rs 2,676.8 apiece today. The company reported a notable 62% EBITDA growth to Rs 3.3 billion, beating analysts’ estimates by 33% in Q1FY24. Owing to higher railway revenues and better performance in Agri/ECE/RED segments, Escorts Kubota’s revenue grew 16% on-year to Rs 2.3 billion. Escorts Kubota’s share price soared over 16% in the last one month and over 27% in the last six months. Axis Securities, Emkay and Nuvama have recommended a ‘Buy’ rating on the stock, owing to strong Q1 performance and expect further improvement.
Should you buy, sell or hold Escorts Kubota?
Emkay
Buy | Target price: Rs 3020
Axis Securities
Buy | Target price: Rs 2900
“Considering synergies with Kubota in the Agri-machinery business, double-digit growth in Construction Equipment Division and Railway Equipment Division in FY25E, strong cash flows, and negligible debt, we maintain our BUY rating with a revised target price of Rs 2,900/share (Rs 2,310/share earlier), valuing the company at 22x Jun’25E EPS (earlier 21x FY25 EPS). The TP implies an upside potential of 13% from the CMP.”
Nuvama
Buy | Target price: Rs 3000
“We expect Escorts to grow at double the industry’s pace over the next five years, owing to Global Kubota’s (GK) support in the form of: i) the merger of Kubota India trading entity; ii) opening up of new export opportunities; and iii) technological support for product development. We build in revenue/earnings CAGR at 25%/54% over FY23-25E. Retain ‘BUY’ with a revised TP of INR3,000 (earlier INR2,610).”