Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Research

| More

BUY on Escorts - Strengthening the core - HDFC Securities

Posted On: 2020-05-20 13:19:00


Mr. Aditya Makharia, Institutional Research Analyst, HDFC Securities.

Escorts (Initiating Coverage): Strengthening the core. BUY
(TP Rs 950, CMP Rs 835, MCap Rs 74bn)

We initiate on Escorts with a BUY as the domestic tractor OEM will benefit from the equity investment by Japan's leading tractor major Kubota. The partnership will provide new growth avenues for Escorts across product segments (including mechanised equipment) as well as geographies (new export markets as well as manufacturing base for Kubota's international operations). Further, the government is rolling out structural reforms in the agricultural segment, which will enhance farm incomes. These initiatives will promote mechanisation of agriculture.

Strategic investment by Kubota...: Escorts has deepened the existing relationship with Kubota as the Japanese partner is investing Rs 10.4bn for a 10% equity stake in Escorts. The Japanese major will have a right to nominate two non-executive board members on the Board.

...to provide new growth opportunities across products and geographies:We believe that Escorts will strengthen its tractor product portfolio, which will drive market share gains (~12% currently) particularly in the southern region, where the north based OEM has been traditionally weak. The arrangement will also enable Escorts to be a part of Kubota's international supply chain and the Indian manufacturing unit could be used as a hub for the Japanese partners' global operations. Escorts will benefit from Kubota's expertise in mechanized equipment - the farm machinery segment is nascent in India, with annual sales of Rs 70bn ($925mn). As the Indian farming practices mature, this segment is expected to benefit. We believe that Escorts will be well equipped to gain from this shift.

Agri reforms: The government has rolled out several structural reforms to improve farm incomes such as amending the stringent Essential Commodities Act and allowing inter state trade in agriculture. These initiatives will benefit the agri chain as it will improve price discovery for the produce, thus enhancing farm incomes. Further, the forecast of normal rainfall by the IMD will be supportive of agri incomes in the current year.

Initiate with a BUY: We set a target price of Rs 950 at 15x FY22E EPS. We value the stock at a 15% premium to the last five year average trading multiple. We believe the equity infusion by Kubota will strengthen the balance sheet and will provide multiple growth avenues for Escorts - both in India as well as internationally. Key risks: Any delay in implementation of reforms by the government, delays in fund infusion by Kubota/material changes in the arrangement between the two partners.

Shares of ESCORTS LTD. was last trading in BSE at Rs.835.4 as compared to the previous close of Rs. 810.75. The total number of shares traded during the day was 215694 in over 5353 trades.

The stock hit an intraday high of Rs. 841.2 and intraday low of 817.9. The net turnover during the day was Rs. 179334515.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

IPO Review - Computer Age Management Services - ICICI Securities

Company Update - EIH Ltd - ICICI Securities

Gladiator Stocks - Godrej Properties - ICICI Securities

Company Update - Dr Reddy's Laboratories - ICICI Securities

Gladiator Stocks: Pharma Thematic - ICICI Securities

Company Update - Housing & Urban Development - ICICI Securities

Covid Recovery Pulse - E-Way bill generation shows recovery signs with auto volumes flat - ICICI Securities

Quant Pick - UltraTech Cement - ICICI Securities

Lupin & Cipla - Positive News - Angel Broking

Sterling and Wilson Solar Ltd - 106.71 MW order win - Angel Broking

Dr. Reddy's Laboratories - Settles Revlimid litigation in US - ICICI Securities

Natco Pharma - Natco to launch first generic Revlimid - ICICI Securities

Solar Industries - Overseas and defence key to profitability - ICICI Securities

Federal Bank - Strengthening liability muscle; fees & charges revised upwards - ICICI Securities

HCL Technologies Mr. Jyoti Roy, DVP - Equity Strategist, Angel Broking Ltd

CAMS - IPO Note - YES SECURITIES

I-direct Instinct - Intellect Design Arena

P&G Health - Company Update - ICICI Securities

Relaxo Footwears - Mr. Amarjeet Maurya- AVP - Mid Caps, Angel Broking Ltd

Bata India - Mr. Amarjeet Maurya- AVP - Mid Caps, Angel Broking Ltd

Listing of Happiest Minds Technologies - Angel Broking

Dr. Reddy's Lab - Sep 17, 2020 - Angel Broking

VA Tech Wabag - Uphill task ahead; dilution at discount valuation - ICICI Securities

Polymer price tracker - PVC price hikes continue unabated - ICICI Securities

Brigade Enterprises - Resilience amid turbulence - ICICI Securities

Apollo Hospitals Enterprises - Recovering well from COVID-19 impact - ICICI Securities

NTPC - Sustainability targets encouraging - ICICI Securities

Gladiator Stocks - Oberoi Realty - ICICI Securities

Gladiator Stocks - Automotive Axles - ICICI Securities

Quant Pick - IDFC First Bank - ICICI Securities

Company Update - Jammu & Kashmir Bank - ICICI Securities

India Aviation Data - August 2020 - Angel Broking

Shree Cement - Higher volumes to offset lower prices - ICICI Securities

Apollo Hospitals - Q1FY21 Result Update - ICICI Securities

Refining & marketing - Oil price fall boosted GRMs, to push marketing margins up - ICICI Securities

Mr. Deepak Jasani, Head of Retail Research views on FICCI National Executive Committee Meeting with Reserve Bank of India Governor Shaktikanta Das

India trade deficit for August 2020 - Angel Broking

Chemcon Chemicals IPO - Mr. Keshav Lahoti - Associate Equity Analyst, Angel Broking Ltd

CAMS IPO - Mr. Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking Ltd

August 2020 Trade Data - Acuité Ratings & Research

Wim Plast - Q1FY21 Result Update - ICICI Securities

Company Update - Mishra Dhatu Nigam - ICICI Securities

Stock Tales - Laurus Labs - ICICI Securities

Stock Tales - Granules India - ICICI Securities

Stock of the day - Chalet Hotel - Target INR 200 - Angel Broking

Upgrade to ADD on Dr. Reddy's Labs - Improved visibility in the US business - HDFC Securities

Monetary Policy post CPI inflation numbers for August 2020 - Angel Broking

HUDCO - Q1FY21 Result Update - Angel Broking

Update on Steriscience pharma - Angel Broking

Covid-19 vaccine development by AstraZeneca - Angel Broking







Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019