On Road Price
Escorts Limited one of India’s leading tractor manufacturers, reported 19.5% yoy growth in domestic tractor sales in May 2018. It sold 8,087 tractors in May 2018 in the domestic market against 6,770 tractors in May 2017. Export volume more than doubled. The company exported 238 tractors in May 2018 against 116 tractors in May 2017. Total volume, which includes exports and imports, was up 21% yoy at 8,325 units in May 2018.
Escorts will benefit from a recovery in rural income, infrastructure building and railways in India. It reported robust Q4FY18 led by strong performance in construction equipment (revenue up 45% yoy) and agri-machinery (up 36% yoy). After a strong 26% yoy tractor volume growth in FY18, Escorts began FY19 with 26% yoy volume growth in April 2018. It has guided for 3,000 tractor volumes in FY19 vs 2,000 in FY18. Outstanding railway order book stood at Rs350cr as on March 31, 2018, amounting to 1.2x annual revenues. Normal monsoon prediction, pick up in rural spending and government's thrust on infrastructure building are medium-term triggers. Escorts derives revenue from agri-machinery (76% in Q4FY18), construction equipment (19%) and railway equipment (5%). It is one of the leading tractor manufacturers in India with a capacity of 100,000 tractors/year. On the back of cost control measures and product mix, Escorts has seen steady improvement in tractor margins from 10% in Q4FY17 to 15% in Q4FY18.