Escorts surges 5% as tractor sales grow 80% YoY in August

The company's management remains optimistic for the coming festive months

Shares of Escorts gained 5 per cent to Rs 1,143 on the BSE on Tuesday after the company reported a strong 80.1 per cent year-on-year (YoY) jump in tractor sales in the month of August, 2020.

The company’s Agri Machinery Segment (EAM) sold 7,268 tractors, its highest-ever August sales. It had sold 4,035 tractors in August 2019. On month-on-month (MoM) basis, the volume was up 36.6 per cent, Escorts said in a statement.

The market sentiment continues to be highly positive with good monsoons, better Kharif sowing, crop prices holding up well and good supply of retail finance, it said.

The management remains optimistic for the coming festive months. The supply side situation improved significantly as compared to last month.

“We are currently operating close to peak capacity now. In August 2020 we could build some inventory both at dealer and depots, which since last few months was at very low levels,” the company said.

Escorts reported 79.4 per cent YoY growth in domestic tractor sales in August 2020 at 6,750 tractors against 3,763 tractors in August 2019. The export tractor sales in August 2020 were up 90.4 per cent YoY at 518 tractors against 272 tractors sold in August 2019.

Analysts at ICICI Securities believe the demand trajectory would continue to remain healthy in coming quarters, courtesy positive farm sentiment, backed by a good Rabi harvest, remunerative crop prices, adequate water table levels, ongoing normal monsoon progress and expectations of a strong Kharif output.

Lower incidence of Covid-19 in semi-urban, rural geographies is a further positive, while continued government focus on rural incomes and infrastructure along with underpenetrated nature of overall farm mechanisation products remain structural tailwinds in the medium to long term, it said.

At 09:34 am, the stock was trading 4.7 per cent higher at Rs 1,138 on the BSE, as compared to 0.94 per cent rise in the S&P BSE Sensex. It hit a 52-week high of Rs 1,211 on July 22, 2020. A combined around 1.5 million equity shares have, so far, changed hands on the counter on the NSE and BSE.