Escorts Kubota (ESCORTS) Q2 24/25 earnings summary

Executive summary

• Celebrated 80 years of operations and completed the merger of Escorts Kubota India and Kubota Agricultural Machinery India into Escorts Kubota Limited, restating prior period numbers from April 1, 2023.

• Q2 FY25 standalone revenue was ₹2,476.2 crore, up 0.5% YoY; consolidated revenue was ₹2,488.5 crore, up 0.4% YoY.

• Net profit for Q2 FY25 rose to ₹326.7 crore, up 53.2% YoY, with EPS at ₹29.71, up from ₹19.4 YoY.

• Amalgamation resulted in the allotment of 1,379,493 equity shares in September 2024.

• Announced divestment of Railway Equipment Division to Sona BLW Precision Forgings for ₹1,600 crore, subject to approvals.

Financial highlights

• Q2 FY25 EBITDA was ₹267.6 crore, margin at 10.8%, nearly flat YoY; consolidated EBITDA at ₹264.7 crore (10.6% margin).

• Net profit for Q2 FY25 was ₹326.7 crore, aided by a one-time ₹91 crore gain from tax provisions and brought-forward losses.

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

• Earnings per share (basic) for Q2 FY25 was ₹29.48.

• Cash and cash equivalents as of September 30, 2024, stood at ₹269.68 crore.

Outlook and guidance

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

• Construction equipment demand expected to rise in H2, driven by government stimulus and pre-buying ahead of new emission norms in January 2025.

• Export momentum expected to improve from Q4, with new products targeting Southeast Asia and Mexico; high double-digit export growth anticipated next year from a low base.

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

• The company expects continued growth in agri machinery and construction equipment segments, focusing on operational efficiency and capital allocation.