Escorts Kubota (ESCORTS) Q2 24/25 earnings summary

Executive summary

• Completed the merger of Escorts Kubota India and Kubota Agricultural Machinery India into Escorts Kubota Limited, restating prior period numbers and marking a major Indo-Japan machinery collaboration.

• Q2 FY25 standalone revenue rose 0.5% YoY to ₹2,476.2 crore, with PAT up 53.2% YoY to ₹326.7 crore and EPS up 52.8% YoY to ₹29.71.

• Consolidated Q2 FY25 revenue was ₹2,488.5 crore, with PAT up 54% YoY to ₹324.2 crore.

• Announced divestment of the railway equipment business to Sona BLW Precision Forgings for ₹1,600 crore, subject to approvals.

• Launched a new export hub in Faridabad and received RBI registration for captive finance operations.

Financial highlights

• Standalone Q2 FY25 operating revenue: ₹2,476.2 crore; EBITDA: ₹267.6 crore (margin 10.8%, flat YoY).

• Net profit: ₹326.7 crore, up ₹53.2 crore YoY, aided by a one-time ₹91 crore gain from capital gains provision and brought-forward losses.

• EPS: ₹29.7 vs ₹19.4 YoY.

• Consolidated Q2 revenue: ₹2,488.5 crore; EBITDA: ₹264.7 crore (margin 10.6%); net profit: ₹324.2 crore, up 54% YoY.

• Q2 FY25 other income up 23.1% YoY; material cost as % of revenue improved by 70 bps YoY.

Outlook and guidance

• Domestic tractor industry expected to grow at mid-single digits for FY25, with double-digit growth anticipated in H2 due to strong festival demand and favorable agri conditions.

• Export momentum expected to improve from Q4 as new products launch for Europe, Southeast Asia, and Mexico.

• Construction equipment demand to rise in H2, driven by government stimulus and pre-buying ahead of new emission norms.

• Order book for Railway Equipment Division exceeds ₹1,100 crore as of September 30, 2024.

• Continued growth expected in agri machinery and construction equipment segments, focusing on operational efficiency and capital allocation.