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Reliance Securities Report
Escorts Kubota Ltd. has delivered a highly subdued performance in Q2 FY23 with Ebitda margin coming in at 8.1% (down 540 basis points YoY/down 190 bps QoQ), versus our estimate of 10.3% due to lower operating leverage, higher commodity cost and lower than expected realization (higher discounts) of tractor business.
It seems clear pricing pressure amid competitive intensity in tractor segment, as Ebit margin of tractor segment declined 650 bps YoY and 220 bps QoQ to 8.4%.
Revenue increased by 12% YoY (down 7% QoQ) to Rs 18.8 billion, in line with our estimate of Rs 18.9 billion.
Tractor volume grew by 13% YoY (down 12% QoQ), while construction equipment volume de-grew by 15% YoY (down 5% QoQ).
Escorts' Ebitda decreased by 33% YoY (down 24% QoQ) to Rs 1.5 billion, 21.5% below our estimate of Rs 1.9 billion due to higher raw material prices and inferior product mix.
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