1
Please refer to important disclosures at the end of this report
1
1
Escorts Limited is an engineering company, which offers agricultural tractors and
construction equipment. The Company's segments are Agri Machinery, Auto
Ancillary Products, Railway Equipment, Construction Equipments and Others.
Escorts outperformed the tractor industry growth rate (18%), leading to an
increase in its market share from 10.3% to 10.8% in FY17. Management is
targeting for double-digit EBITDA margin in FY18 v/s 7.5% in FY17, driven by
sales growth (subject to good monsoon) and initiatives on raw
material/employee costs. Going ahead, it is expected that Escorts will continue to
deliver robust performance mainly driven by revenue and EBITDA margin
expansion. The company is continuously in process to compress cost, better our
margins and strengthen customer connect. Moving to the election year again,
from the government side there will be a lot of push to the agriculture sector. So
the company thinks that the next two years will give them pretty decent growth
numbers, at least on the tractors business side. The railway equipment division is
yet another growth engine that can contribute incrementally to companys fortune
in coming years. This opportunity from Indian Railway could be huge for Escorts
as the company has demonstrated capabilities in ride control products, strong
multi year relationship and robust product development cycle. Escorts ability and
focus on launching new products to gain market share has been successful in the
recent past and may continue to benefit in future as well. With growth
opportunities galore in all four business divisions of Escorts the company can
keep the growth momentum alive and continue to reward shareholders in years
to come. Hence Buy.
BUY
CMP `668
52 Week High / Low
684/168
Avg. Daily Volume
3,70,698
Automobile
Market Cap (` cr)
8,189
10
BSE Sensex
31,159
Nifty
9,625
Face Value (`)
Reuters Code
ESCO.BO
ESC@IN
1.3
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Escorts
Others | Automobile
May 31, 2017
2
Escorts | Automobile
May 31, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Escorts
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)