Street remains bullish on Escorts despite a 2.5x run since March

Sustained tractor demand, market share recovery and pick up in exports key tailwinds

Shares of Escorts — the country’s second-largest tractor maker — have gained 156 per cent since their March intra-day lows. This has been aided by the demand for tractors, which has remained healthy despite unprecedented disruption to the economy. 

The better-than-expected demand comes on the back of a robust rural economy, which has been spurred by good rainfall for the second straight year, higher Kharif sowing, and stable crop prices. 

This has translated into strong earnings growth, with the firm’s operating profit jumping more than 50 per cent in H1FY21 to Rs 421 crore, compared to Rs 269 crore in the year-ago