Escorts Ltd Q1FY19
Standalone Results Q1FY19: (in Rs cr)
|EBITDA Margin (%)
|Net Profit (adjusted)
***EBITDA margin change is bps
Escorts Limited reported in-line numbers for Q1FY19. The company reported a standalone revenue of Rs1,511cr, up 32% yoy (5% qoq), exactly meeting the consensus estimate. EBITDA was up 90% yoy (7% qoq) at Rs186cr, while EBITDA margin expanded 374bps yoy (18bps qoq) to 12.3%. EBITDA and EBITDA margin was higher than the consensus estimate of Rs167cr and 11.1%, respectively.
- Within segments, revenue for the largest segment (agri-machinery products) grew 25% yoy (8% qoq), while the second-largest segment (construction equipment), grew 49% yoy. Railway business revenue was up 35% yoy. In short, top-line performance for Q1FY19 was powered by all three segments.
- Operating performance was led by strict control on costs and lower input expenses (as % of sales). Within segments, the agri-machinery products segment saw 64% yoy (1% qoq) growth in EBIT. The segment has been performing very strongly owing to robust rural cues and tractor sales. The railway segment has seen a steady improvement in operating performance over the past four quarters. EBIT for the railway segment tripled (yoy) in Q1FY19 to Rs22cr.
Highlights from the Q1FY19 presentation
- The tractor sector is expected to grow (in volume terms) by 12-15% in FY19.
- The construction equipment sector is expected to grow (in volume terms) by 16-18% in FY19.
- Escorts sold 24,494 tractors in Q1FY19, a growth of 39.5% yoy (4% qoq). It sold 1,345 construction equipment in Q1FY19, a growth of 52% yoy (down 13% qoq).
- Term loan declined from Rs50cr as of March 31, 2018, to Rs35cr as of June 30, 2018.
- Railway order book stood at Rs300cr as of June 30, 2018, double the value from the year-ago period.
Highlights from post result conference call
Agri Machinery segment:
- Company gained 100bps market share in Q1FY19.
- Tractor industry grew 18% yoy in North and Central India and 32% yoy in South and Western India
- New products such as “Atom” compact tractors and paddy specialist tractors was monthly sales run-rate of 60-70 units. This is likely to increase to 250-300 units from October 2018 onwards.
- Industry will grow between 0-2% in Q2FY19 due to timing of festive season.
- Escorts credit is financing nearly 1,000 units/month. Coverage has been increasing, and is expected to reach 70-80% of dealerships by December 2018.
- Company to expand capacity by 50,000 units from current capacity of 1– 1.1 lakhs. It will spend Rs100cr for the same.
- Emission norms to change for 50HP+ tractors in October 2020, which would increase vehicle price by Rs1,00,000/unit. Emission norm changes for other segments expected from CY2022 or CY2023.