Avendus has maintained its Reduce rating on Escorts Kubota, revising the target price slightly downward to ₹3,260 from ₹3,290. The brokerage cited steep valuations as the primary reason for its cautious stance, even as it acknowledged several long-term growth triggers across segments.
For the domestic tractor segment, Avendus expects mid-single-digit growth to continue through FY27E, indicating a stable but unspectacular demand outlook. However, export prospects appear brighter. The brokerage estimates a robust ~28% CAGR in export volumes through FY27E, supported by entry into newer markets and a broader portfolio of product launches.
On the capital expenditure front, Escorts Kubota is expected to complete land acquisition for its planned greenfield plant by FY26, with start of production (SOP) targeted for FY29E. In the construction equipment division, steady volume trends are projected through the forecast period ending FY27E.
Overall, Avendus sees Escorts Kubota achieving a total volume CAGR of approximately 7% over FY27. However, the brokerage remains cautious due to the company’s elevated valuation levels, which it believes already price in much of the medium-term growth optimism.
Disclaimer: The views expressed in this article are based on the brokerage report of Avendus and do not represent the opinions or recommendations of this publication. Investors are advised to consult their financial advisors before making investment decisions.
