The shares of the leading engineering conglomerate operating in n Agri-machinery Construction and Railway Equipment gained 4.6 percent to a 52-week high price of Rs 3,348.45 a share after DAM Capital Advisors gave a ‘buy’ recommendation with an upside of 59 percent.
At 11:25 a.m., on the National Stock Exchange, Escorts Kubota Ltd shares were trading at Rs 3,335.80, up 4.38 percent from the previous close.
The company’s shares have delivered returns of 77 percent in six months and 58 percent in a year.
The company’s revenue climbed by 16 percent year on year, rising from Rs 2,032 crore in Q1FY23 to Rs 2,355 crore in Q1FY24. During the same time period, net profit increased by 93 percent from Rs 148 crore to Rs 285 crore.
DAM Capital initiated a ‘buy’ call on Escorts Kubota with a target price of Rs 5,100 per share, up from Rs 3,150 per share earlier, representing an upside potential of up to 59%.
The rationale behind providing such a recommendation is
● The Investment Bank expects strong healthy export growth on account of new products and capitalising on Kubota’s global network and the company is likely to see its market share expand to the tune of 150-200 basis points over the next 4-5 years through the synergies and the relative strength of both brands in their respective markets.
● The company’s margins are also estimated to expand through operational efficiency and localization, based on the recent acquisition of a controlling stake in Escorts from Kubota Corporation.
● Escorts Kubota is boosting its revenues from other segments of construction equipment and global material sourcing while expanding the agri implements business, DAM Capital reported.
● DAM Capital projects Escort Kubota to report a Compounded Annual Growth Rate (CAGR) of 17%, 37%, and 41% for its revenue, operating profit, and net profit respectively, over the financial year 2023-2026.
Escorts Kubota Ltd is engaged in the manufacturing of agricultural tractors, engines for agricultural tractors, construction, earthmoving and material handling equipment, round and flat tubes and many more.
Written by Omkar Chitnis
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