Escorts was buzzing in trade today and closed the day with a gain of nearly 4 percent. In the last one month, the stock has gained nearly 15 percent.

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Sonia Shenoy reports that the stock has been moving up post its Q1FY22 earnings, which were very strong. The management had said that the demand trends were improving and sowing had picked up in rural areas.

Kotak has put a buy rating on the stock with a target price of Rs 1,700. The brokerage believes that the valuation of Escorts is quite attractive at 17x FY23 earnings.

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The brokerage says that the tractor industry is growing at a rapid pace, led by good monsoon, stable crop prices and higher rabi output.

In the first quarter, the tractor manufacturer had registered a two-fold increase in net profit. The company's standalone net profit rose to Rs 185.2 crore in the said quarter from Rs 92.2 crore in the year-ago period.

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Escorts' revenue from operations improved in the quarter. It reported a 57.4 percent year-on-year increase in revenue from operations at Rs 1,671.5 crore in Q1 FY22 against Rs 1,061.6 crore reported in the same period last fiscal.

The company's tractor sales grow 42.9 percent to 25,935 units in the first quarter of FY22. Escorts had sold 18,150 tractors in the corresponding period last fiscal.

According to a Times of India report, Japanese agri company Kubota Corporation may increase its stake by 5-7 percent in Escorts.

The Japanese company currently holds a 10 percent stake in Escorts. An Escorts spokesperson, however, said that this was speculation and the company does not comment on speculations.

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(Edited by : Bivekananda Biswas)

First Published:Aug 25, 2021 4:19 PM IST