Broker's call: Escorts (Buy)

| Updated on January 05, 2021

CD Equisearch

Escorts (Buy)

Target: ₹1,610

CMP: ₹1313.80

The Indian tractor industry has been benefited by structural reforms in the agriculture sector, including easier availability of institutional credit, introduction of new agri schemes such as Paramparagat Krishi Vikas Yojana, Pradhan Mantri Gram Sinchai Yojana and Sansad Adarsh Gram Yojana. Increase in minimum support prices and approval of the National Mission on Food Processing augurs well too the agrarian economy.

Other demand-supporting factors over the last few years have been consistent growth in horticulture production, after armers felt the need to diversify their sources of income. This has fuelled demand for increased mechanisation solutions for orchards, vineyards and other horticulture crops.

After having grown at some 6 per cent CAGR during the last 10 years, the growth prospects of the Indian tractor industry appear barely weak, not least due to increased impetus of the government on agrarian economy, rising need of tractors in non-farm sector and increasing need for farm mechanisation.

Partnering with Kubota Corporation, Japan in 2018 after months of deliberations was no puny affair for Escorts for it enabled it to leverage Kubota's coveted production system for manufacturing Farmtrac brand of tractors in India and global distribution network for key export markets, including South Africa, Thailand and Europe.

Published on January 06, 2021

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