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Motilal Oswal Report
Escorts Kubota Ltd.'s Q1 FY24 results were better across all fronts, led by multiple levers, such as better average selling prices, gross margin benefits, and cost-control measures.
Consequently, Escorts Kubota's Ebitda margin came in at 14% (versus estimate 10.8%). The management has guided for-
low-mid single-digit tractor volume growth in FY24E and
sustenance of Ebitda margin for the coming quarters.
We raise our FY24E/FY25E earnings per share by 21.4%/9.3% to factor in for margin expansions and high ‘other income'.
Moreover, we have increased our target multiple to 22 times September-25E earnings per share (versus 20 times earlier).
We retain our 'Neutral' stance on the stock with a target price of Rs 2,450.
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