Escorts gains on brokerage buy rating

Escorts rose 2.32% to Rs 680.30 at 15:14 IST on BSE on reports that a foreign brokerage has initiated coverage with a buy rating on the stock for a target price of Rs 835.

Meanwhile, the S&P BSE Sensex was up 304.37 points or 0.92% at 33,253.58. The S&P BSE Mid-Cap index advanced 0.84%, underperforming the Sensex.

On the BSE, 1.41 lakh shares were traded on the counter so far as against average daily volumes of 2.70 lakh shares in the past one quarter. The stock had hit a high of Rs 688.50 and a low of Rs 670 so far during the day. The stock had hit a record high of Rs 788 on 31 October 2017 and a 52-week low of Rs 277.50 on 26 December 2016.

The stock had underperformed the market over the past one month till 7 December 2017, sliding 5.72% compared with the Sensex's 1.26% fall. The stock had also underperformed the market over the past one quarter, gaining 1.08% as against the Sensex's 4.06% rise. The scrip had, however, outperformed the market over the past one year, advancing 107.91% as against the Sensex's 25.58% rise.

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

The brokerage feels new products will boost market share, margins, and profits of Escorts going forward. Cost cutting, improved product mix and increased capacity utilization will drive profits and construction equipment will break even in FY18, it reportedly said. Positives are improved demand, favourable monsoons, increasing farm mechanisation and improving farming income, the broker added.

Escorts' net profit surged 147.9% to Rs 77.56 crore on 25.5% growth in net sales to Rs 1211.69 crore in Q2 September 2017 over Q2 September 2016.

Escorts is one of India's leading engineering conglomerates. The company has diversified business in to three different segments: escorts agri machinery, escorts construction equipment and railway equipment division.

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