Escorts Kubota Q4 Review: Motilal Oswal Maintains 'Neutral' On Market Share Loss Concern, Cuts Target Price

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Motilal Oswal Report

The demand for domestic tractors is improving, with FY26 volumes expected to grow 6-7%, driven by a healthy monsoon, favorable crop prices, and government support.

However, the key concern remains that Escorts Kubota Ltd. has lost market share to competition in FY25, partly due to an unfavorable regional mix. However, this regional skew is likely to continue even in FY26E, making it challenging for Escorts Kubota to regain its lost share, at least in the near term. The Construction Equipment industry outlook also remains weak.

As such, we have lowered our FY26E/27E EPS estimates by 3%/7%. While synergies between Escorts and Kubota are significant, they will likely materialize over the medium to long term. Given the above concerns, the stock at 31.6x/27.7x FY26E/27E EPS appears fairly valued.

We reiterate a Neutral rating on the stock with a target price of Rs 3,227, based on ~28x FY27E earnings per share.

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