Escorts Q1 Review - High Inventory, Raw Material Inflation Are Key Headwinds: Dolat Capital
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Dolat Capital Report
Escorts Ltd. printed a strong operating performance amid Covid-19 impacted quarter.
Ebitda margin beat estimates, stood at 14% (up 269 basis points YoY; down 164 bps QoQ) led by price hike and better mix.
Revenue at Rs 16.7 billion (down 24% QoQ) led by 19% QoQ de-growth in agri machinery products, 56% in construction equipment and 18.5% in railway equipment segment.
Management is hoping for low, single digit growth (~5-6%) on high base for the tractor segment for FY22 on the back of positive macroeconomic factors like high reservoir levels, better retail financing, record crop production and better food grain price.
We expect high channel inventory (45-50 days at industry level while 30 days for Escorts) to constraint dispatches growth.
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