Escorts Kubota – Farming crusader

Escorts Kubota Limited previously known as Escorts Limited is an Indian multinational conglomerate that operates in the sectors of agricultural machinery, construction machinery, material handling, and railway equipment. Its headquarters are located in Faridabad, Haryana. The company was launched in 1944 and has marketing operations in more than 40 countries. Escorts manufactures tractors, automotive components, railway equipment, and construction and material handling equipment.

Escorts Limited was originally founded as Escorts Agents Ltd. in 1944 by brothers Har Prasad Nanda and Yudi Nanda. They started a family-owned business, Nanda Bus Company, in Lahore.

Escorts Limited was founded in 1960 after the company set up its manufacturing base at Faridabad and began manufacturing agricultural machinery, x-ray machines with Westinghouse and heating elements with Elpro.

Quarterly Growth Walkthrough

Escorts registered their consolidated Net Sales at Rs 2,291 crore in December 2022 which is up by 15.5% from Rs 1,998 crore that was registered in December 2021.

The consolidated Quarterly Net Profit at reported at Rs 181 crore in December 2022 which has declined by 7% from Rs 194 crore which was reported in December 2021.

EBITDA was computed at Rs 283 crore in December 2022 which has declined by 7% from Rs 305 crore which was computed for December 2021.

The third quarter performance was faced major consequences due to lower production (due to high inventory at second quarter end) and unabsorbed cost inflation of 1-1.5%, which resulted in lower margin at 8.4%. The near-term demand outlook remains positive, a limited correction in RM costs should help in recovery for overall EBITDA margin.

Technical Analysis

Escorts Weekly Candlestick Chart on Sharekhan’s TradeTiger

Escorts stock price has made a break over the 261.8% retracement level and the price faces resistance as a result of profit booking and stock unloading by investors. The price has overextended above the 200-day exponential moving average which makes the stock highly overbought, and the MFI is at 64 points which confirms the overbought condition. The next target for this stock is the 423.6% retracement level at Rs 2940 which can be achieved in the long-term. Investors should accumulate this stock on corrections.

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