Tractor growth, partnership with Japan's Kubota key triggers for Escorts

Gains in market share, margins, and new launches are already priced in

A better-than-expected June quarter performance and expectations of steady growth in FY21 led to a 4.5 per cent gain for the Escorts stock. The outperformance was because of a better product mix and lower expenses, which resulted in higher realisations and margin expansions. The operating front gains came despite a 14 per cent year-on-year (YoY) fall in tractor volumes. Agri machinery (tractors) is the largest of the three segments Escorts is in, and accounts for 80 per cent of its revenues. 

The operating profit margin expanded by 130 basis points YoY to 11 per cent as compared to Street estimates of