Escorts gains after strong quarterly results

Escorts rose 1.05% to Rs 120.50 at 12:07 IST on BSE after net profit rose 61.9% to Rs 45.56 crore on 12.5% rise in net sales to Rs 1154.45 crore in the quarter ended December 2013 over the quarter ended December 2012.

The company announced the result at the fag end of the trading session on Monday, 27 January 2014.

Meanwhile, the BSE Sensex was down 63.20 points, or 0.31%, to 20,644.25.

On BSE, so far 1.89 lakh shares were traded in the counter, compared with an average volume of 6.15 lakh shares in the past one quarter.

The stock hit a high of Rs 123.50 and a low of Rs 119.20 so far during the day. The stock hit a 52-week high of Rs 145.15 on 26 December 2013. The stock hit a 52-week low of Rs 48.35 on 28 March 2013.

The stock had underperformed the market over the past one month till 27 January 2014, sliding 13.90% compared with the Sensex's 2.29% fall. The scrip had, however, outperformed the market in past one quarter, rising 28.02% as against Sensex's 0.12% rise.

The small-cap company has an equity capital of Rs 122.58 crore. Face value per share is Rs 10.

Escorts has extended its financial year by 6 months i.e. up to 31 March 2014 as approved by the board of directors in their meeting held on 2 October 2013. The board had approved the company to extend its financial year to align with the April-March fiscal calendar. Accordingly, financial year 2012-13 will close on 31 March 2014.

Escorts said its tractor volumes went sequentially up by 28.3% to 19,047 tractors in the quarter ended December 2013 compared with 14,842 tractors in the quarter ended September 2013. Volumes rose 11.4% as against 17,106 tractors in the quarter ended December 2012.

Despite a challenged economic environment that included delay in approval of projects, the construction equipment volume rose sequentially by 11.5% to 737 units in the quarter ended December 2013 as compared to 661 in the quarter ended September 2013, the company said.

The Indian automobile industry is witnessing continued pressure owing to sustained deceleration in economic activity and consequent weakness in consumer and business sentiment. Overall industry slowdown has resulted in revenue of Rs 29.40 crore in the quarter ended December 2013, compared with Rs 31.40 crore in the quarter ended September 2013, Escorts said.

Against a backdrop of stagnant growth in Indian Railways, Escorts Railway Products posted strong growth with sales increasing by 20.2% to Rs 33.20 crore in the quarter ended December 2013 compared with Rs 27.70 crore in the quarter ended December 2012. The order book position as on 1 Jan 2014 was Rs 38 crore. The Escorts' Air Brake System for BMBS Wagons has been performing satisfactorily in the field for the past 9 months and commercial benefits will start after approval by mid-2014, the company said in a statement.

Speaking on the results, Chairman Mr. Rajan Nanda said, "Increase in volumes, better product mix, product enrichment and cost savings across all verticals have been the pillars of success for the last 15 months. Today, Escorts is strengthening its product portfolio to meet the aspirations of its customer base with higher dependency on mechanization and technology. The past 15 months have seen the Industry grow by about 14% with strong growth coming in from South and West markets. While these markets have not been the traditional strongholds of Escorts, the company has shown good growth of 8% in markets of North and East where it is strong.

The overall macro-economic factors, including crop prices, monsoons, crop production and government focus has helped in sustaining growth in the sector. We feel we shall continue on the growth path and improve on the basis of new products launched in the last two quarters. We continue to expect a growth of over 10% and are working towards further expanding our customer reach."

Mr. Nikhil Nanda, Managing Director added, "For the last 15 months and specifically for the last quarter, we have worked on strengthening our image and technology leadership by understanding our, customer better. The new products, Farmtrac Executive Series & Powertrac Diesel Saver Plus EURO, are challenging the myth that a tractor needs only power and efficiency. We believe and are establishing that these are basic requirements and the farmer also looks at a tractor as more than a work tool it is an aspirational and status statement as well. We have aggressively expanded our business across the globe. It was a proud moment when the Company launched its new range of Europe line and Heritage Series tractors at Hanover, Germany in November 2013. Our ambition is to globally create leadership positions in the tractor market below 100 horse power. Today, we at Escorts stand committed for doing it in the right way and in a manner that will help us to give India's best to the world and bring the world's best to India."

Escorts is a leading engineering conglomerates with presence across the high growth sectors of agri-machinery, construction & material handling equipment; railway equipment and auto components. The company has diversified business into four different segments: Escorts Agri Machinery (EAM), Escorts Construction Equipment (ECE), Escorts Railway Products (ERP) and Escorts Auto Products (EAP).

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