Escorts Ltd - Q1FY21 First Cut - ICICI Securities

(CMP: Rs. 1,099; MCap: Rs. 13,463 crore)

Escorts reported a healthy performance in Q1FY21, with key operational readings being largely in line with our estimates.

Q1FY21 Earnings Summary

- Total operating income for Q1FY21 came in at Rs. 1,062 crore, down 25.4% YoY vs. our estimates of Rs. 1,074 crore. Within its segments, Gross revenue from agri equipment machinery (EAM) stood at Rs. 954 crore vs. our estimates of Rs. 955 crore. Tractor ASP for the quarter stood at Rs. 5.25 lakh/unit, barely changed QoQ. Tractor sales volume for the quarter stood at 18,150 units, down 13.8% YoY

- Gross Revenue from construction equipment de-grew by 75.3% YoY to Rs. 52 crore while revenue from railway equipment was down by 53.5% YoY to Rs. 55 crore. Volumes in the construction equipment declined by 78% YoY to 234 units. Present Railway order book of Rs. 480 crore is expected to be executed over the next 12-15 months

- EBITDA in Q1FY21 stood at Rs. 119.6 crore (down 16% YoY) with attendant EBITDA margins at 11.3% (down 281 bps QoQ) as against I-direct estimate of Rs. 123.5 crore at 11.5%. EBIT margins of the agri machinery (tractors) segment came in at 14.5%, down ~130 bps QoQ

- Consequent standalone PAT in Q1FY21 came in at Rs. 92.2 crore, up 5.3% YoY (I-direct estimate: Rs. 98.2 crore). Separately, share of loss from JV with Kubota Corporation of Japan stood at Rs. 1.5 crore

Escorts is likely to outperform the auto OEM space given its exposure to the rural economy through the tractors division, which is recovering well in the post Covid months amid buoyant demand prospects, relatively lower income pressures and progress of normal monsoon 2020.

We would be coming out with a detailed report soon.

Shares of ESCORTS LTD. was last trading in BSE at Rs.1156.85 as compared to the previous close of Rs. 1106.95. The total number of shares traded during the day was 201965 in over 8170 trades.

The stock hit an intraday high of Rs. 1168.75 and intraday low of 1096.1. The net turnover during the day was Rs. 230410423.

Source : Equity Bulls

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