Escorts Q2FY21 Performance Overview
Introduction
In the last 1 year, Escorts stock has delivered phenomenal returns to the tune of ~112% and metamorphosed into a mid cap company. Also, as a consequence of the favorable conditions at present for the Tractor industry, this company is being re-rated. Let us further explore and analyze the Q2 FY21 results posted by the company.
Escorts Q2FY21 Results Analysis
Escorts Ltd Stock Rally
- Company’s share price has soared like an eagle from Rs. 662 in November 2019 to Rs. 1420 in November 2020.
- It has a 52-week low of Rs. 526.05 and recently hit a 52 week high of Rs. 1422.3.
Escorts Q2 FY21 Results (Standalone)
- The company’s domestic tractor market share has contracted by 1.4% and 0.9% YoY and QoQ basis respectively.
- Don’t let the above figures deceive you into believing that the company has under-performed. The overall tractor market has witnessed an expansion in the previous quarter and simultaneously Escorts has been operating at optimum capacity utilization,
- Therefore it is a positive sign as company can capitalize this new opportunity to expedite growth in revenues and profit in the coming quarters.
- The company has recorded a robust revenue growth of 24% YoY basis as well as 54.5% QoQ basis exhibiting recovery trends.
- Escorts seems to be functioning above their breakeven point as the benefit of operating leverage is visible with material costs shrinking by 4% both YoY and QoQ.
- On similar lines Manpower costs have decreased by 1.5% YoY and 4.3% QoQ.
- EBITDA and EBITDA margins have expanded commensurately by whooping 137% and 8.7% YoY as a ripple effect of enhanced operating leverage.
- Despite increase in tax rate, company has managed to record a 2.2 times jump in Net Profit YoY with PAT Margins also up by 6.2% on YoY basis.
Conclusion
The continued recovery in demand for farm equipment has provided an impetus for robust growth in sale of tractors . The upward thrust in agriculture sector is expected to continue as a result of positive macro-economic factors.
Even after a 112% rally in stock price the company still has a huge growth potential . Hence thereby continues to captivate the interest of institutional investors.
