Escorts Kubota Q4 Results Review - Inline; Valuations Fully Reflect Merger Synergies: Yes Securities

Yes Securities Report

Escorts Kubota Ltd. Q4 FY24 results were steady with no major surprises across parameters. Better average selling price, operating leverage and cost passthrough led construction equipment Ebit margins highest at 10.7% (+260 basis points YoY/ +240 bp QoQ). However, the contraction in agri segment Ebit margins to 11.2% (+120 bp YoY/ -270 bp QoQ) is sharper than expected.

The sustenance of margins to be influenced by weak operating leverage as tractor volumes are expected to be muted in H1 FY25E.

The co guidance of low to mid-single digit volume growth for the domestic industry hinges primarily on normal monsoons as demand sentiments are weak.

However, we remain constructive on growth opportunities for merged entity in tractor, implements, components sourcing and exports over mid-term.

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