Escorts poor Q3FY22 results are not a surprise with flat revenue growth and a steep decline in profits

Escorts poor Q3FY22 results are not a surprise with flat revenue growth and a steep decline in profits

by 5paisa Research Team Last Updated: Dec 13, 2022 - 03:27 pm 37.8k Views
Listen icon

In Q3FY22 the margins had a big hit due to negative operating leverage and volume drop in tractor and construction equipment division.

A leading tractors manufacturer Escorts announced their Q3 results during the last hour of yesterday’s trading session. It gained 0.8% yesterday post-result announcement, the momentum continued today with another 0.82% increase for the day. Price movement shows the street is not surprised with poor numbers.

Q3 earnings report:  

On a consolidated basis, Escorts Revenue declined 3% to Rs 1,957 crore on a YoY. Overall the company’s volume sale has gone down by around 19.8% against the industry volume decline of 9.8%. Major revenue contributor Escorts Agri Machinery (76.9% of revenue) was down by 8.9% YoY, Escorts construction equipment(12.6% of revenue) was up by 12.9% YOY, Railway equipment division(8.8% of revenue) was up by 48.1% YOY.

EBITDA declined 27.3% to Rs 264 crore on YoY, as a result, margins got contracted 453 bps on YoY stood at 13.5%. This margin contraction is due to an increase in the raw material cost, around 450 bps increase in the cost of raw materials as a percentage to sales. This quarter got negatively impacted by operating leverage and volume drop in tractor and construction equipment division.

Net Profit slumped 28.2% to Rs 201.5 crore on YoY. The net profit margin is 10.2% which got contracted 280 bps on YoY. The tractor industry has now been impacted for two consecutive quarters due to the high base of last year, a delayed harvest of Kharif crops owing to late monsoon rains this year which affected the rural cash flows and the retail demand.

Outlook: The company expects cash flows to improve with better Kharif procurement and a positive outlook with good Rabi sowing. While high inflation remains a concern, they are hopeful of macro-economic factors to be in favour of agriculture to boost rural demand. We continue to invest in new product development and distribution spread to offer enhanced reach and customer experience across domestic and global markets. Multiple initiatives in agriculture and infrastructure development focus from the government will be helpful in creating opportunities across their agriculture, construction & railway portfolio.

At 3.30 PM, Escorts closed at Rs 1,856, up by 0.82% for the day. 

Share Market Today


How do you rate this article?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

378X91-D3

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.


Enjoy 0%* Brokerage with 5paisa
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest News
Trust Fintech IPO Subscribed 108.63 times

Trust Fintech IPO is book-built issue of ₹63.45 crores, consisting entirely of fresh issue shares totalling 62.82 lakh. Trust Fintech IPO commenced its subscription period on March 26, 2024, & concludes today, March 28, 2024.

Aspire & Innovative IPO Subscribed 15.17 times

Aspire & Innovative IPO is a book built issue of Rs 21.97 crores. The issue comprises entirely a fresh issue of 40.68 lakh shares. Aspire & Innovative IPO opens for subscription on March 26, 2024, and closes on March 28, 2024. The allotment for the Aspire & Innovative IPO is expected to be finalized on Monday, April 1, 2024.

Blue Pebble IPO Subscribed 56.32 times

Blue Pebble IPO, valued at ₹18.14 crores, comprises fresh issue of 10.8 lakh shares. Commencing subscription on March 26, 2024, Blue Pebble IPO is set to conclude on March 28, 2024. Allotment process is scheduled to be finalized by Monday, April 1, 2024. Following this, IPO is slated to debut on NSE SME, with tentative listing date of Wednesday, April 3, 2024.