By Axis Securities
Escorts reported a very good set of numbers in Q4FY21 and stood marginally above our estimates. Escorts’s total revenues stood at Rs 2,211 crore in Q4FY21 (our estimate: Rs 2,151 crore, larger by 2.8%) as against Rs 1,381 crore in Q4FY20, a development of 60% yoy. This was led by 62% yoy volume development in tractors and ~47% yoy improvement in the building gear (ECE) and the railway gear division (RED) revenues.
EBITDA came in at Rs 345 crore (our estimate: Rs 333 crore) as compared to Rs 364 crore reported in Q3FY21, a de-development of ~5%qoq. EBITDA margin stood at 15.6% (contraction of 245 bps qoq) in line with our estimate of 15.5%. The margins contracted on account of the adverse effect of increasing commodity rates.
The business reported PAT of Rs 271 crore (our estimate: Rs 260 crore, larger by 4.5%) as compared to Rs 140 crore in Q4FY20, a development of 93% yoy. The company’s ECE division posted a top rated line of Rs 322 crore, up 53.3% yoy, against Rs 210 crore reported in Q4FY20. The volumes stood at 1,604 units.
The RED posted a top rated line of Rs 146 crore as against Rs 108 crore in Q4FY20. At finish of March 2021, the division’s order book stood at more than Rs 340 crore that would get executed in the next 6-8 months. We keep our ‘buy’ rating on the stock and worth the business at 15x (from 17x earlier) FY23E P/E to arrive at a revised target cost of Rs 1,350/share (from Rs 1,600/share earlier) on account of close to-term headwinds and a moderate development outlook.