Dolat Capital: Escorts Standing Tall In Tough Times
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Dolat Capital Report
Escorts Ltd. delivered a decent operating performance in Q1 FY21 amid a tough environment. Its Ebitda de-grew 16% YoY to Rs 1.19 billion (versus estimate Rs 1.13 billion).
Ebitda margin improved 125 basis points YoY to 11.3% led by better product mix (higher HP tractor) and cost control initiatives.
Revenue declined 25.4% to Rs 10.61 billion led by 12.7% decline in agrimachinery products, 75% in construction equipment and 53% in railway equipment.
Management stated that the overall rural sentiment is positive because of the record output of Rabi crop and a good early monsoon. Tractor sales grew 22% YoY in June, led by a sharp 60% growth in the southern region.
Despite weak Q1, the management expects lower single digit growth for the tractor industry for FY21.
The company is operating at 50-60% utilization and is expected to scale up to full capacity by mid-August with smoothening of supply chain and labor issues.
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