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Revenue
₹2,277 Cr
verified against source
Revenue YoY
—
reported change
EBITDA
₹267.6 Cr
latest reported figure
Source
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Actual signal trajectory
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What the record says.
Escorts Kubota reported Q2 FY25 standalone revenue of INR 2,476.2 crore with EBITDA margin of 10.8%, flat YoY. PAT surged to INR 326.7 crore, boosted by a one-time tax benefit of ~INR 91 crore from merger-related adjustments. Agri-machinery revenue grew 5.3% YoY to INR 1,884.2 crore, but EBIT margin slipped to 9.1% due to merger dilution. Construction equipment revenue fell 14% YoY to INR 379.9 crore, impacted by weak crane demand. Railway equipment revenue declined 10% to INR 211.2 crore, with an order book of over INR 1,100 crore. Management guided for mid-single-digit tractor industry growth in FY25, with H2 double-digit growth expected. Key risks include delayed greenfield plant (FY27-28) and continued margin dilution from merged entities. The railway business divestment to Sona Comstar is underway.
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Guidance to track
- Management expects the domestic tractor industry to grow mid-single digit in FY25, with H2 double-digit growth driven by good rainfall and reservoir levels.
- Full-year EBITDA margin dilution from merged entities is expected to be around 1.5%, improving from Q2's higher dilution.
- Land allotment expected within 6 months; commercial production targeted in 2.5 years from land allotment, i.e., FY27-28.
- New products for Mexico and Southeast Asia will be ready by year-end, driving export growth from Q4.
Risks flagged
- Post-merger margin dilution was higher in Q2 due to low revenue base; full-year dilution expected at 1.5% but may vary.
- Land acquisition for the greenfield plant is still pending; any delay beyond 6 months could push commercial production beyond FY28.
- Analyst questioned the low valuation (12x PAT) for the railway business despite structural growth; management cited limited buyer interest.
- Export volumes declined 21% YoY due to recession in Europe; new market entry (Mexico, SE Asia) may take time to offset.
Key quotes
- These two JVs at a combined level were more or less break-even operations, and they had about 2,000 crore of sales as a top line with very nominal operating margin.
- We expect within the next six months, we should be able to close on the land part. And if we get the land allotted in the next six months, then we expect within the next two and a half years, we should be able to go live on the commercial production on the tractor side.
- Our current inventory levels are between 35 days-37 days of stock on an annualized basis.
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