'Buy' This Stock For +18% Upside In 1 Year

Brokerage firm Emkay Global has recommended investors to buy Escorts' stocks with a potential upside of 18.7%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of Escorts is Rs. 217 The brokerage firm, Emkay Global has estimated a Target Price for the stock at Rs. 290. Hence the stock is expected to give an 18.7% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 1803
Target Price	Rs. 2140
1 year returns	18.70%

Company performance

In FY 21, the company's revenue stood at Rs. 69,293 mn, EBITDA was Rs. 11,292 mn, while APAT stood at 8,741. In FY 22, the brokerage firm is expecting the revenue to grow to Rs. 75,056 mn. Additionally, Escorts' board announced Kubota (a 9% shareholder) will acquire 46.9mn additional shares through preferential allotment plus open offer, and join the Nandas as a co-promoter. Emkay Global is expecting, "Kubota's takeover will substantially improve Escorts' medium-term growth outlook, based on: 1) localization of existing tractor imports currently done by Kubota's India JV; 2) leveraging Escorts for global component supplies to support Kubota's global sales; 3) technology support in construction equipment, farm implements, and high-end tractors."

Comments by Emkay Global

According to Emkay Global, "We are increasing Escorts' medium-term (FY23-31E) revenue CAGR to 15% from 11%, with enhanced market presence in the domestic tractor market upon expansion of the product portfolio, especially in wet-land applications, which represent more than 10% of industry volumes, and for higher exports by leveraging Kubota's global distribution network."

About the company

Escorts is India's one of the biggest tractor manufacturers and suppliers. Their productions are outspread in the fields of Agri Machinery, Construction Equipment, and Railway Equipment. With Kubota's stake hike in the company, it will have a better exposure both on the domestic and the international fronts.

Disclaimer

The above stock was picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

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