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Escorts' December domestic tractor volume up 14%

Escorts' December domestic tractor volume up 14%

Total sales, which includes exports and imports, were up 13% yoy because of a 10% slide in exports. Total tractor sales for the month of December 2017 were 3,606 versus 3,187 for December 2016.

Domestic sales were at 3,476 units in December 2017 versus 3,043 units in December 2016, while exports were at 130 units in December 2017 versus 144 units in December 2016.

For the quarter (Q3FY18) ended December 31, 2017, domestic sales, exports and total sales were up 11%, 41% and 12%, respectively. For 9MFY18, the growth numbers were 15%, 93% and 16.5% respectively.

Escorts derives revenue from the agri-machinery segment (80%), construction equipment (CE) (14%) and railway products (6%). It is one of the leading tractor manufacturers in India with capacity of 100,000 tractors/year. Its CE products include cranes, compactors and backhoe loaders. The company aims at increasing CE products contribution to 18-19% on the back on new rollouts.

The tractor cycle is expected to remain favorable in India in the coming two years on account of improving farm sentiment. This is because of back-to-back years of normal monsoon coupled with higher rural spends by the government. New launches and geographical penetration in the tractor segment along with higher traction in construction equipment segment (road and infra spends) is expected to drive ~15% revenue CAGR over FY17-20E. The company is witnessing improvement in CE performance and aided by restructuring initiatives, we expect PAT to grow at 43% CAGR over FY17-20E.

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