Escorts

Rs1,723.05 - SELL
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Hitesh Goel Losing the plot

hitesh.goel@clsa.com Loses market share despite decline in margin
+91 22 6650 5007
Escorts’ 1QFY23 results were significantly below estimates as its Ebitda margin
declined 340bps QoQ versus expectations of a 150bp increase. Management
highlighted that an adverse product mix, an increase in input costs and losses in
market share in its strong regions impacted its margin. Margin improvement will be a
gradual process despite a decline in metal costs as the company tries to regain market
share. We downgrade our rating from BUY to SELL and lower our target price from
Rs2,069 to Rs1,612 as we cut our earnings estimates by 24%-26% over FY23-24 on
the back of lower volume estimates and margins.
2 August 2022
Big miss on margin led to negative surprise
India Escorts reported an Ebitda margin of 10% (down 340bps QoQ) in 1QFY23, which was
Autos 480bps below our estimate as the tractor Ebit margin fell 480bps QoQ despite a 22%
QoQ increase in volume and a 2% QoQ increase in ASP. Management pointed out that
Reuters ESCO.NS the company lost 215bps of market share QoQ (9.3% in 1QFY23 versus 11.4% in
Bloomberg ESCORTS IN
4QFY22) as it corrected dealer inventory and as it lost retail market share as its product
Priced on 1 August 2022 pricing was higher than the industry and as the industry shifted to lower HP. Per Vahaan
CNX Nifty @ 17,340.1
registration data, Escorts lost 130bps of market share YoY but gained 50bps market
12M hi/lo Rs1,908.85/1,194.10 share QoQ. 1QFY23 retail market share stood at 10.7%.
12M price target Rs1,612.00
±% potential -6% Company will look to defend market share
Shares in issue 110.5m The company was optimistic on the tractor industry to grow in single digits YoY in
Free float (est.) 69.8% 1QFY23 but highlighted concern over its market share loss in its strong markets. It
Market cap US$2.9bn indicated it will take actions to improve its market share while indicating margin
improvement would only take place in 4QFY23.
3M ADV US$9.7m
Foreign s'holding 30.1%
Kubota-Escorts synergies yet to play out
Major shareholders We estimate Escorts to gain market share in the domestic industry in the medium term
Promoter group 30.3% as it benefits from the partnership with Kubota and leverages its strong network in the
western and southern markets. On the exports side, we expect Escorts’ volume to see
a strong 30% Cagr over FY22-25CL as Escorts leverages Kubota’s distribution network.

Blended ESG Score (%)*

Downgrade to SELL
Overall 80.0 We downgrade our recommendation from BUY to SELL as we cut our earnings
Country average 70.6 estimates 24%-26% over FY23-24 on a 7% lower volume forecast and a c.400bp cut in
GEM sector average 70.3 our Ebitda margin. We believe company will likely sacrifice margin gains in the near
*Click to visit company page on clsa.com for details
term to gain back market share.
Stock performance (%)
1M 3M 12M
Absolute 17.5 5.4 45.5 Financials
Relative 6.9 4.0 32.3 Year to 31 March 21A 22A 23CL 24CL 25CL
Abs (US$) 16.9 1.7 (100.0) Revenue (Rsm) 69,293 71,527 79,965 91,617 101,046
Rev forecast change (%) - - (5.0) (6.5) -
Net profit (Rsm) 8,741 7,656 7,296 10,338 11,865
NP forecast change (%) - - (26.4) (24.3) -
EPS (Rs) 86.3 69.3 66.0 93.6 107.4
CL/consensus (14) (EPS%) - - 81 99 101
EPS growth (% YoY) 58.0 (19.7) (4.7) 41.7 14.8
PE (x) 20.0 24.9 26.1 18.4 16.0
Dividend yield (%) 0.4 0.4 0.6 0.8 0.9
ROE (%) 19.7 11.5 8.9 11.6 12.0
Net debt/equity (%) (24.4) (3.3) (9.3) (16.1) (21.9)
Source: Bloomberg Source: www.clsa.com

CLSA and CL Securities Taiwan Co., Ltd. (“CLST”) do and seek to do business with companies covered in its research reports. As such,
investors should be aware that there may be conflicts of interest which could affect the objectivity of the report. Investors should consider
this report as only a single factor in making their investment decisions. For important disclosures please refer to page 20.
 Losing the plot Escorts - SELL

Financials at a glance
Year to 31 March 2021A 2022A 2023CL (% YoY) 2024CL 2025CL

Profit & Loss (Rsm)

Revenue 69,293 71,527 79,965 11.8 91,617 101,046
Cogs (ex-D&A) (45,937) (49,328) (57,734) (64,590) (71,237)
Gross Profit (ex-D&A) 23,356 22,199 22,230 0.1 27,027 29,809
SG&A and other expenses (12,064) (12,686) (13,720) (14,891) (16,181)
Op Ebitda 11,292 9,513 8,510 (10.5) 12,136 13,627
Depreciation/amortisation (1,157) (1,298) (1,388) (1,535) (1,682)
Op Ebit 10,135 8,216 7,122 (13.3) 10,601 11,946
Net interest inc/(exp) 660 594 1,168 96.7 1,719 2,376
Other non-Op items 776 1,410 1,464 3.8 1,500 1,540
Profit before tax 11,571 10,219 9,754 (4.6) 13,820 15,862
Taxation (2,831) (2,563) (2,458) (3,483) (3,997)
Profit after tax 8,741 7,656 7,296 (4.7) 10,338 11,865
Minority interest 0 0 0 0 0
Net profit 8,741 7,656 7,296 (4.7) 10,338 11,865
Adjusted profit 8,741 7,656 7,296 (4.7) 10,338 11,865
Cashflow (Rsm) 2021A 2022A 2023CL (% YoY) 2024CL 2025CL
Operating profit 10,135 8,216 7,122 (13.3) 10,601 11,946
Depreciation/amortisation 1,157 1,298 1,388 6.9 1,535 1,682
Working capital changes 2,202 (7,265) 1,215 346 (627)
Other items (2,304) (79) (2,458) (3,483) (3,997)
Net operating cashflow 11,190 2,169 7,267 235 8,999 9,003
Capital expenditure (1,342) (1,999) (3,500) (3,500) (3,500)
Free cashflow 9,848 170 3,767 2,112.2 5,499 5,503
M&A/Others (20,625) (16,717) 2,631 3,219 3,916
Net investing cashflow (21,968) (18,715) (869) (281) 416
Increase in loans (112) (61) - - -
Dividends (245) (737) (1,094) (1,551) (1,780)
Net equity raised/other 10,494 18,924 0 0 0
Net financing cashflow 10,137 18,126 (1,094) (1,551) (1,780)
Incr/(decr) in net cash (641) 1,580 5,304 235.8 7,167 7,639
Exch rate movements - - - - -
Balance sheet (Rsm) 2021A 2022A 2023CL (% YoY) 2024CL 2025CL
Cash & equivalents 13,165 2,585 7,889 205.2 15,056 22,695
Accounts receivable 6,984 8,276 10,516 27.1 12,048 13,288
Other current assets 6,745 8,036 8,984 11.8 10,293 11,352
Fixed assets 18,984 18,885 20,998 11.2 22,963 24,782
Investments 23,050 51,335 51,335 0 51,335 51,335
Intangible assets 0 0 0 0 0
Other non-current assets 3,105 4,602 5,043 9.6 5,551 6,135
Total assets 72,032 93,717 104,764 11.8 117,246 129,586
Short-term debt - - - - -
Accounts payable 11,871 8,777 13,145 49.8 16,315 17,994
Other current liabs 4,748 4,767 5,244 10 5,768 6,345
Long-term debt/CBs - - - - -
Provisions/other LT liabs 1,498 1,392 1,392 0 1,392 1,392
Shareholder funds 53,916 78,782 84,983 7.9 93,770 103,855
Minorities/other equity 0 0 0 0 0
Total liabs & equity 72,032 93,717 104,764 11.8 117,246 129,586
Ratio analysis 2021A 2022A 2023CL (% YoY) 2024CL 2025CL
Revenue growth (% YoY) 20.3 3.2 11.8 14.6 10.3
Ebitda margin (%) 16.3 13.3 10.6 13.2 13.5
Ebit margin (%) 14.6 11.5 8.9 11.6 11.8
Net profit growth (%) 80.0 (12.4) (4.7) 41.7 14.8
Op cashflow growth (% YoY) 37.0 (80.6) 235.0 23.8 0.0
Capex/sales (%) 1.9 2.8 4.4 3.8 3.5
Net debt/equity (%) (24.4) (3.3) (9.3) (16.1) (21.9)
Net debt/Ebitda (x) - - - - -
ROE (%) 19.7 11.5 8.9 11.6 12.0
ROIC (%) 37.6 27.1 20.0 28.4 29.8
Source: www.clsa.com

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2 August 2022 hitesh.goel@clsa.com 2

 Losing the plot Escorts - SELL

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1QFY23 results summary and takeaways

Figure 1

Escorts 1QFY23 standalone results summary

(in Rs mn) 1QFY22 4QFY22 1QFY23 % QoQ % YoY 1QFY23CL % deviation
Net sales 16,715 18,696 20,149 7.8 20.5 20,931 (3.7)
Raw materials (11,411) (13,107) (14,546) 11.0 27.5 (14,610) (0.4)
Staff costs (1,371) (1,192) (1,369) 14.8 (0.2) (1,200) 14.1
Other expenses (1,601) (1,881) (2,217) 17.9 38.5 (2,013) 10.2
Total expenses (14,383) (16,181) (18,133) 12.1 26.1 (17,822) 1.7
Ebitda 2,332 2,515 2,016 (19.8) (13.6) 3,108 (35.1)
Other income 472 538 354 (34.2) (24.9) 620 (42.8)
Interest expense (30) (29) (26) (10.4) (12.2) (29) (10.4)
Depreciation (314) (330) (364) 10.3 16.0 (330) 10.3
PBT 2,461 2,695 1,981 (26.5) (19.5) 3,369 (41.2)
Tax expense (609) (673) (506) (24.8) (16.9) (842) (39.9)
PAT 1,852 2,022 1,475 (27.1) (20.4) 2,527 (41.7)
Adjusted PAT 1,852 2,022 1,475 (27.1) (20.4) 2,527 (41.7)
No of shares 110 110 110
EPS 17 18 13 (27.1) (20.4)
Key ratios
Tractor volumes 25,935 21,895 26,797 22.4 3.3 26,797 0.0
Tractor ASPs 544,218 626,056 638,577 2.0 17.3 634,972 0.6
As % of sales
Raw Materials 68.3 70.1 72.2 2.1 3.9 69.8 2.4
Staff costs 8.2 6.4 6.8 0.4 (1.4) 5.7 1.1
Other expenses 9.6 10.1 11.0 0.9 1.4 9.6 1.4
Ebitda 14.0 13.5 10.0 (3.4) (3.9) 14.9 (4.8)
Effective tax rate 24.8 25.0 25.6 0.6 0.8 25.0 0.6
Segmental revenue breakup
Tractor 14,114 13,708 15,958 16.4 13.1 17,015 (6.2)
Construction 1,408 3,195 2,461 (23.0) 74.8 2,200 11.9
Railways 1,194 1,728 1,734 0.3 45.2 1,650 5.1
Unallocated (2) 65 (4) (106.1) 150.0 65
Total revenues 16,715 18,696 20,149 7.8 20.5 20,931 (3.7)
Segmental EBIT margin
Tractor 15.6 15.4 10.6 (4.8) (5.0) 16.5 (5.9)
Construction (2.3) 3.6 1.0 (2.6) 3.3 3.9 (2.9)
Railways 14.6 13.1 13.6 0.4 (1.0) 13.3 0.2
Total 14.9 14.6 10.0 (4.6) (4.9) 16.2 (6.2)
Source: Company, CLSA

Earnings call takeaways

q On the tractor segment, the company stated that it lost market share in its
key markets driven by industry shift to lower HP segment. While the
industry grew 22% YoY in the north and central regions which are stronger
markets for Escorts, the company’s volumes grew by just 4% YoY. For other
regions where the industry grew 10% YoY, Escorts’ volumes declined 4%
YoY.
q Escorts expects volumes in August to drop while early onset of the festive
season should help in improvement in volumes in September. Current
channel inventory for the company stands at 27-35 days while it is higher
for the competition. For FY23, the company remains positive and expects
low to mid-single digit growth for the industry. This is basis expectation of
normal monsoon and recovery in rainfall which have not yet received

2 August 2022 hitesh.goel@clsa.com 3

 Losing the plot Escorts - SELL

adequate rainfall and adequate water reservoir levels. Tractor volume could
come under pressure if the recovery does not happen.
q On the exports, Escorts’ market share increased 85bps YoY to 6.2%.
Volumes for Escorts in Q1 increased 53% with 20%+ coming from Kubota
channels. The company expects the mid-term business plan on integration
with Kubota to be finalised by end of Q2.
q The company highlighted that unfavourable product mix due to shift to
lower HP segment and steep commodity inflation in the quarter led to
decline in margins. Other income also fell due to temporary mark-to-market
losses on the treasury investments. Despite taking a price hike of c.2% in
Q1, there is still unabsorbed inflationary pressures of about 300-350bps as
raw material basket saw a 5-6% QoQ increase. While the company is
working on cost reduction initiatives and has already taken a price hike of
c.2% in Q2, it highlighted that margins could remain under pressure in the
next 2 quarters as the absorption capacity of the customers in terms of
price hikes is also limited.
q On the construction equipment industry, the company has guided for high
teens growth for FY23. For the railway division, sales from new products
contributed 67% to the revenues. Order book increased to Rs8.5bn at the
end of the quarter driven by strong traction in tendering. The company
expects double digit growth in FY23.
q Escorts has guided for capex of Rs3-3.5bn for FY23.

Figure 2

Total tractor volume for Escorts grew 3% YoY and 22% QoQ in 1Q

Source: Company, CLSA

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 Losing the plot Escorts - SELL

Figure 3

Escorts lost market share While domestic volume for Escorts increased QoQ, market share declined in 1Q
in its strong markets as the
industry shifted to lower
HP segment

Source: Company, CLSA

Figure 4

Escorts took a price hike of Tractor ASPs have been increasing over the past six quarters
c.2% in 1Q

Source: Company, CLSA

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 Losing the plot Escorts - SELL

Figure 5
Tractor retail registrations Tractor industry retail registrations, July 2021 – July 2022, (units, %)
declined 27% YoY in July
2022 on a high base

Source: Ministry of Road Transport and Highways, CLSA

Figure 6

Escorts lost c.20bps of Tractor industry retail market share, July 2021 – July 2022, (%)
market share YoY in July
2022

Source: Ministry of Road Transport and Highways, CLSA

2 August 2022 hitesh.goel@clsa.com 6

 Losing the plot Escorts - SELL

Figure 7

Uttar Pradesh, Rajasthan Tractor industry retail state-wise market share, July 2021 – July 2022 (%)
and Karnataka gained
market share YoY from
other states

Source: Ministry of Road Transport and Highways, CLSA

Figure 8

Escorts gained market share Served construction industry volumes and Escorts’ market share, fiscal year-ends, 2017-1Q23
in the cranes segment in Rs bn 2017 2018 2019 2020 2021 2022 1Q’23
1Q23 Backhoe loader 30.7 38.6 47.2 39.7 45.7 32.7
Cranes 4.4 8.1 10.2 7.4 7.4 7.6
Compactors 3.6 4.2 5 4.4 4.8 4.2
Total 38.7 50.9 62.4 51.5 57.9 44.5 10.9
YoY growth (%) 31.5 22.6 (17.5) 12.4 (23.1)
Escorts market share (%)
Backhoe loader 2.2 2.2 1.7 1.2 1.4 2.1 1.5
Cranes 47.8 38.3 39.8 38.5 38.2 39.8 42.5
Compactors 10.7 10.3 11.1 8.1 7.5 8.6 5.5
Source: Company, CLSA

Figure 9

We expect construction Revenue and EBIT margin of construction equipment segment, March fiscal year-end, 2017-25CL
equipment segment (Rs mn, %)
revenues to see an 11%
Cagr over FY22-25 and for
its Ebit margin to improve
to 7%

Source: Company, CLSA

2 August 2022 hitesh.goel@clsa.com 7

 Losing the plot Escorts - SELL

Figure 10

Railway order book Railway division order book levels, March fiscal year-end, 2017-1Q23 (Rs mn, %)
increased to more than
Rs8.5bn as of end 1Q

Source: Company, CLSA

Figure 11

We expect railway segment Revenue and EBIT margin of railways segment, March fiscal year-ends, 2017-25CL (Rs mn, %)
revenue to see a 14% Cagr
over FY2022-25CL and its
EBIT margin to improve to
17%

Source: Company, CLSA

2 August 2022 hitesh.goel@clsa.com 8

 Losing the plot Escorts - SELL

Figure 12

We expect revenue to see a Standalone revenues and YoY growth, March fiscal year-end, FY2017-25CL (Rs mn, %)
12% Cagr over FY2022-25

Source: Company, CLSA

Figure 13

We expect its Ebitda margin Ebitda and Ebitda margin, March fiscal year-end, FY2017-25CL (Rs mn, %)
to remain at 13.5% in FY25

Source: Company, CLSA

2 August 2022 hitesh.goel@clsa.com 9

 Losing the plot Escorts - SELL

Figure 14

Segmental revenue and EBIT margin assumptions, March fiscal year-end, FY2017-25CL (Rs mn, %)
2017 2018 2019 2020 2021 2022 2023CL 2024CL 2025CL
Segmental revenues (Rs mn)
Tractors 29,762 35,511 43,415 40,955 53,079 51,977 58,480 67,568 74,355
Constructions 6,068 7,803 10,541 8,398 7,761 9,853 10,838 12,139 13,596
Railways 2,445 2,866 3,941 4,772 4,791 6,362 7,316 8,414 9,424
Auto Component 513 - - - - - - - -
Others 3,401 3,979 4,067 3,485 3,662 3,335 3,330 3,496 3,671
Gross revenues 42,189 50,160 61,964 57,610 69,293 71,527 79,965 91,617 101,046
YoY growth (%)
Tractors 19.3 22.3 (5.7) 29.6 (2.1) 12.5 15.5 10.0
Constructions 28.6 35.1 (20.3) (7.6) 27.0 10.0 12.0 12.0
Railways 17.2 37.5 21.1 0.4 32.8 15.0 15.0 12.0
Others 17.0 2.2 (14.3) 5.1 (8.9) (0.1) 5.0 5.0
Gross revenues 18.9 23.5 (7.0) 20.3 3.2 11.8 14.6 10.3
Segmental EBIT (Rs mn)
Tractors 3,446 5,399 6,665 5,764 10,312 8,560 7,541 11,370 12,484
Constructions (138) 150 378 302 278 239 434 607 952
Railways 307 398 783 858 768 943 1,097 1,346 1,602
Auto Component (103) 0 19 0 0 0 0 0 0
Others (including unallocable expenses) (574) (573) (429) (382) 323 604 604 604 604
Overall EBIT 2,938 5,374 7,416 6,543 11,681 10,346 9,676 13,928 15,642
Segmental EBIT margin (%)
Tractors 10.3 13.6 14.0 13.0 18.2 15.5 12.2 16.0 16.0
Constructions (2.3) 1.9 3.6 3.6 3.6 2.4 4.0 5.0 7.0
Railways 12.5 13.9 19.9 18.0 16.0 14.8 15.0 16.0 17.0
Auto Component (20.0) - - - - - - - -
Overall EBIT margin 7.0 10.7 12.0 11.4 16.9 14.5 12.1 15.2 15.5
Source: Company, CLSA

Figure 15

Tractor volume assumptions, March fiscal year-end, FY2017-25CL (units, %)

2017 2018 2019 2020 2021 2022 2023CL 2024CL 2025CL
Tractor volumes
Domestic 62,699 78,446 93,191 82,252 101,848 87,043 87,043 97,488 105,287
Exports 1,087 1,971 3,221 3,766 4,893 7,185 9,341 13,077 15,692
Total Volumes 63,786 80,417 96,412 86,018 106,741 94,228 96,384 110,565 120,979
Tractor capacity 98,940 98,940 98,940 98,940 120,000 170,000 170,000 170,000 170,000
Capacity utilization (%) 64.5 81.3 97.4 86.9 89.0 55.4 56.7 65.0 71.2
Volume mix (%)
Domestic 98.3 97.5 96.7 95.6 95.4 92.4 90.3 88.2 87.0
Exports 1.7 2.5 3.3 4.4 4.6 7.6 9.7 11.8 13.0
Total Volumes 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
YoY growth (%)
Domestic 25.1 18.8 (11.7) 23.8 (14.5) 0.0 12.0 8.0
Exports 81.3 63.4 16.9 29.9 46.8 30.0 40.0 20.0
Total Volumes 26.1 19.9 (10.8) 24.1 (11.7) 2.3 14.7 9.4
Source: Company, CLSA

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 Losing the plot Escorts - SELL

Figure 16

Standalone income statement, March fiscal year-end, FY2017-25CL (Rs mn, %)

2017 2018 2019 2020 2021 2022 2023CL 2024CL 2025CL
Net sales 40,932 49,951 61,964 57,610 69,293 71,527 79,965 91,617 101,046
Raw materials (27,924) (33,681) (42,407) (38,196) (45,937) (49,328) (57,734) (64,590) (71,237)
Staff costs (4,370) (4,311) (4,717) (5,103) (5,346) (5,283) (5,502) (6,163) (6,902)
Other expenses (5,401) (6,387) (7,507) (7,552) (6,718) (7,403) (8,218) (8,729) (9,279)
Total expenses (37,694) (44,379) (54,631) (50,851) (58,001) (62,014) (71,454) (79,481) (87,419)
Ebitda 3,237 5,572 7,333 6,758 11,292 9,513 8,510 12,136 13,627
Other income 435 594 809 923 1,546 2,130 2,631 3,219 3,916
Depreciation (631) (725) (854) (1,046) (1,157) (1,298) (1,388) (1,535) (1,682)
Interest (311) (286) (185) (155) (110) (127) 0 0 0
Profit before tax 2,730 5,156 7,103 6,481 11,571 10,219 9,754 13,820 15,862
Exceptional item 38 (68) 109 (92) 0 0 0 0 0
Income tax (756) (1,641) (2,375) (1,533) (2,831) (2,563) (2,458) (3,483) (3,997)
Reported PAT 2,011 3,447 4,837 4,855 8,741 7,656 7,296 10,338 11,865
Adjusted PAT 1,985 3,495 4,760 4,920 8,741 7,656 7,296 10,338 11,865
Adjusted EPS 22.3 39.3 53.6 55.4 86.3 69.3 66.0 93.6 107.4
Ratios (%)
Gross margin 31.8 32.6 31.6 33.7 33.7 31.0 27.8 29.5 29.5
RM as a % of sales 68.2 67.4 68.4 66.3 66.3 69.0 72.2 70.5 70.5
Staff cost as a % of sales 10.7 8.6 7.6 8.9 7.7 7.4 6.9 6.7 6.8
Other expenses as a % of sales 13.2 12.8 12.1 13.1 9.7 10.3 10.3 9.5 9.2
Ebitda margin (%) 7.9 11.2 11.8 11.7 16.3 13.3 10.6 13.2 13.5
EBIT margin (%) 6.4 9.7 10.5 9.9 14.6 11.5 8.9 11.6 11.8
PAT margin (%) 4.8 7.0 7.7 8.5 12.6 10.7 9.1 11.3 11.7
Effective tax rate (%) 27.7 31.8 33.4 23.7 24.5 25.1 25.2 25.2 25.2
YoY growth (%)
Net sales 22.0 24.0 (7.0) 20.3 3.2 11.8 14.6 10.3
Ebitda 72.1 31.6 (7.8) 67.1 (15.8) (10.5) 42.6 12.3
Adjusted PAT 76.0 36.2 3.4 77.7 (12.4) (4.7) 41.7 14.8
Adjusted EPS 76.0 36.2 3.4 55.9 (19.7) (4.7) 41.7 14.8
Source: Company, CLSA

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 Losing the plot Escorts - SELL

Figure 17

Standalone balance sheet, March fiscal year-end, FY2017-25CL (Rs mn, %)

2017 2018 2019 2020 2021 2022 2023CL 2024CL 2025CL
Equity & Liabilities (Rs mn)
Share capital 1,226 1,226 1,226 1,226 1,348 1,319 1,319 1,319 1,319
Reserves and surplus 18,686 24,255 29,003 33,575 52,568 77,462 83,664 92,451 102,536
Shareholder equity 19,912 25,481 30,229 34,801 53,916 78,782 84,983 93,770 103,855
Borrowings 2,117 137 2,694 66 - - - - -
Provisions 1,508 1,482 1,444 1,557 1,498 1,392 1,392 1,392 1,392
Trade payables 8,938 12,255 12,125 12,639 11,871 8,777 13,145 16,315 17,994
Other current liabilities 2,658 3,341 3,478 4,058 4,748 4,767 5,244 5,768 6,345
Total liabilities 15,220 17,214 19,741 18,320 18,116 14,936 19,781 23,476 25,731
Total equities and liabilities 35,132 42,695 49,969 53,121 72,032 93,717 104,764 117,246 129,586
Assets (Rs mn)
Net fixed assets 16,122 16,451 17,070 17,493 18,984 18,885 20,998 22,963 24,782
Non-current investments 5,875 8,943 8,566 11,663 23,050 51,335 51,335 51,335 51,335
Other non-current assets 470 - - - - - - - -
Total non-current assets 22,467 25,394 25,636 29,155 42,033 70,220 72,332 74,298 76,116
Inventories 4,295 5,411 8,219 8,222 6,745 8,036 8,984 10,293 11,352
Trade receivables 4,580 6,000 9,320 7,565 6,984 8,276 10,516 12,048 13,288
Cash and bank balances 545 3,119 2,301 3,185 13,165 2,585 7,889 15,056 22,695
Short-term loans and advances 3,111 2,489 2,738 3,011 2,560 2,944 3,385 3,893 4,477
Other current assets 134 282 1,757 1,982 546 1,658 1,658 1,658 1,658
Total current assets 12,664 17,301 24,334 23,966 29,999 23,498 32,432 42,948 53,470
Total assets 35,132 42,695 49,969 53,121 72,032 93,717 104,764 117,246 129,586
Ratios (%)
Debt to equity (x) 0.1 0.0 0.1 0.0 - - - - -
Net debt to equity (x) 0.1 (0.1) 0.0 (0.1) (0.2) (0.0) (0.1) (0.2) (0.2)
RoAE (%) 10.1 13.5 16.0 14.0 16.2 9.7 8.6 11.0 11.4
RoACE (%) 16.6 36.0 34.8 22.0 28.8 12.7 7.8 11.0 12.1
Inventory days (on sales) 38 40 48 52 36 41 41 41 41
Receivable days 41 44 55 48 37 42 48 48 48
Payable days 80 90 71 80 63 45 60 65 65
Source: Company, CLSA

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Figure 18

Standalone cash flow statement, March fiscal year-end, FY2017-25CL (Rs mn, %)
2017 2018 2019 2020 2021 2022 2023CL 2024CL 2025CL
Cash flow statement (Rs mn)
Profit before tax 2,183 5,088 7,231 6,388 11,571 10,219 9,754 13,820 15,862
Depreciation 645 725 854 1,046 1,157 1,298 1,388 1,535 1,682
(Gain) on sale of assets (58) (223) (336) (45) (34) (109) 0 0 0
Asset write off 341 190 (220) (289) (481) (403) 0 0 0
Net interest expense/(income) (58) (25) (230) (297) (692) (790) (2,631) (3,219) (3,916)
Interest income (408) (240) (337) (426) (774) (886) (2,631) (3,219) (3,916)
Interest expense 350 214 107 129 82 96 0 0 0
Operating cash flow before WC changes 3,054 5,755 7,298 6,803 11,521 10,214 8,510 12,136 13,627
Changes in WC 398 (13) (7,539) 3,104 2,228 (7,265) 1,215 346 (627)
Income tax paid (444) (1,020) (2,165) (1,741) (2,533) (2,539) (2,458) (3,483) (3,997)
Cash flow from operations 3,008 4,722 (2,407) 8,166 11,216 411 7,267 8,999 9,003
(Purchase) of PPE (528) (1,147) (1,499) (1,946) (1,342) (1,999) (3,500) (3,500) (3,500)
Investments (1,720) (173) (1,044) (2,733) (21,092) (18,076) 0 0 0
Interest income 438 246 346 431 451 1,046 2,631 3,219 3,916
Others 414 103 178 (98) (78) (57) 0 0 0
Cash flow from investing (1,397) (3,784) (136) (4,298) (21,994) (18,715) (869) (281) 416
Change in debt (979) (2,131) 2,268 (2,735) (112) (61) 0 0 0
Change in equity 7 2,506 0 0 10,576 19,021 0 0 0
Dividend and dividend tax paid (129) (161) (222) (260) (245) (737) (1,094) (1,551) (1,780)
Interest expense (278) (209) (129) (87) (82) (96) 0 0 0
Cash flow from financing (1,379) 4 1,917 (3,082) 10,137 18,126 (1,094) (1,551) (1,780)
Net change in cash 233 943 (626) 786 (641) (179) 5,304 7,167 7,639
Cash at start of year 313 545 3,119 2,301 3,185 1,005 2,585 7,889 15,056
Cash at end of year 545 1,488 2,493 3,087 2,544 827 7,889 15,056 22,695
FCF 2,537 3,600 (3,675) 6,518 10,567 (798) 6,399 8,718 9,419
Source: Company, CLSA

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Figure 19

DCF valuation for Escorts

FY20 FY21 FY22CL FY23CL FY24CL FY25CL FY30CL FY32CL
Tractor population in India (mn units) 6.7 7.3 7.8 8.2 8.6 9.1 12.1 13.5
Industry sales volume (units) 705,018 899,406 842,266 892,802 946,370 1,003,152 1,342,444 1,508,370
Escorts market share (%) 11.7 11.3 10.3 9.7 10.3 10.5 11.5 11.5
Domestic volumes of Escorts (units) 82,252 101,848 87,043 87,043 97,488 105,287 154,381 173,463
Export volumes of Escorts (units) 3,766 4,893 7,185 9,341 13,077 15,692 35,900 49,987
Total volume of Escorts (units) 86,018 106,741 94,228 96,384 110,565 120,979 190,281 223,449
ASPs 476,118 497,272 551,610 606,740 611,114 614,612 678,582 705,997
Tractor revenues 40,955 53,079 51,977 58,480 67,568 74,355 129,121 157,754
Other revenues 16,655 16,214 19,550 21,485 24,049 26,690 43,767 52,958
Overall revenues 57,610 69,293 71,527 79,965 91,617 101,046 172,888 210,712
Ebitda 6,758 11,292 9,513 8,510 12,136 13,627 25,933 31,607
Depreciation (1,046) (1,157) (1,298) (1,388) (1,535) (1,682) (2,420) (2,739)
EBIT 5,713 10,135 8,216 7,122 10,601 11,946 23,513 28,868
EBIT Margin (%) 9.9 14.6 11.5 8.9 11.6 11.8 13.6 13.7
EBIT (1-tax) 4,250 7,541 6,112 5,299 7,887 8,888 17,493 21,477
Increase/(Decrease) in working capital 2,652 1,867 (5,799) 1,657 853 (43) (74) (90)
Capex (1,946) (1,342) (1,999) (3,500) (3,500) (3,500) (3,864) (4,020)
Free cash flow 6,002 9,222 (388) 4,844 6,775 7,026 15,976 20,106
Discounted free cash flow 4,844 6,202 5,717 7,214 7,174
WACC (%) 12.5
Terminal growth rate (%) 5.5
Capitalisation rate (%) 7.0
Sum of free cash flow 67,370
Cash flow of terminal value 20,106
Terminal value 303,026
Discounted terminal value 108,117
Enterprise value 175,488
Net debt/(cash) - March 2022 (2,585)
Equity Value 178,072
Shares outstanding 110
Equity value per share 1,612
Source: CLSA

Figure 20

DCF valuation sensitivity to discount rate and terminal growth rate

Terminal growth rate (%)
4.5% 5.0% 5.5% 6.0% 6.5%
11.5% 1,706 1,792 1,893 2,011 2,154
12.0% 1,586 1,658 1,741 1,838 1,953
12.5% 1,481 1,542 1,612 1,692 1,785
13.0% 1,389 1,441 1,499 1,567 1,644
13.5% 1,307 1,352 1,402 1,458 1,523
Source: CLSA

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 Losing the plot Escorts - SELL

Figure 21

Detailed WACC calculation

Assumption Rate Comment
Cost of equity (Ke) 12.5
Cost of debt (Kd) (%) 10.0 Estimated gross cost of debt
Tax rate (%) 25.2 Effective tax rate of 25.2%
Rf (%) 7.5 Government of India 10-yr bond
Beta 0.9
Market risk premium (%) 5.5 For Indian market
Debt/capital (%) 0.0
Equity/capital (%) 100.0
WACC (%) 12.5
Source: CLSA

Figure 22

Escorts is currently trading Escorts trading history

close to +1 std. above its
mean

Source: Bloomberg, Company, CLSA

Figure 23

We cut our earnings estimates by 24-26% for FY23/24 on lower volumes and margin estimates
New Estimates Old Estimates % change
(Rsm) 23CL 24CL 23CL 24CL 23CL 24CL
Tractor Volumes (K units) 96 111 104 119 (7.2) (7.4)
Revenues (Rsm) 79,965 91,617 82,957 95,158 (3.6) (3.7)
Ebitda (Rsm) 8,510 12,136 12,013 16,497 (29.2) (26.4)
Ebitda margin (%) 10.6 13.2 14.5 17.3 (384bps) (409bps)
PAT (Rsm) 7,296 10,338 9,916 13,600 (26.4) (24.0)
EPS (Rs) 66 94 90 123 (26.4) (24.0)
Source: CLSA

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 Losing the plot Escorts - SELL

Valuation details
We value the stock using the DCF methodology. Our DCF-based target price
represents 15x PE on Mar-24 EPS. The stock is currently trading +1std above its
mean trading levels.

Investment risks
Risks include a delayed recovery in the tractor business, a slowdown in the
construction industry, slower-than-expected exports ramp-up, and longer-than-
expected commodity inflationary pressures.

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 Losing the plot Escorts - SELL

Detailed financials
Profit & Loss (Rsm)
Year to 31 March 2019A 2020A 2021A 2022A 2023CL 2024CL 2025CL
Revenue 61,964 57,610 69,293 71,527 79,965 91,617 101,046
Cogs (ex-D&A) (42,407) (38,196) (45,937) (49,328) (57,734) (64,590) (71,237)
Gross Profit (ex-D&A) 19,557 19,413 23,356 22,199 22,230 27,027 29,809
Research & development costs - - - - - - -
Selling & marketing expenses - - - - - - -
Other SG&A (7,507) (7,552) (6,718) (7,403) (8,218) (8,729) (9,279)
Other Op Expenses ex-D&A (4,717) (5,103) (5,346) (5,283) (5,502) (6,163) (6,902)
Op Ebitda 7,333 6,758 11,292 9,513 8,510 12,136 13,627
Depreciation/amortisation (854) (1,046) (1,157) (1,298) (1,388) (1,535) (1,682)
Op Ebit 6,479 5,713 10,135 8,216 7,122 10,601 11,946
Interest income 337 427 770 721 1,168 1,719 2,376
Interest expense (185) (155) (110) (127) 0 0 0
Net interest inc/(exp) 152 272 660 594 1,168 1,719 2,376
Associates/investments - - - - - - -
Forex/other income 20 - - - - - -
Asset sales/other cash items 451 496 776 1,410 1,464 1,500 1,540
Provisions/other non-cash items - - - - - - -
Asset revaluation/Exceptional items 109 (92) - - - - -
Profit before tax 7,212 6,388 11,571 10,219 9,754 13,820 15,862
Taxation (2,375) (1,533) (2,831) (2,563) (2,458) (3,483) (3,997)
Profit after tax 4,837 4,855 8,741 7,656 7,296 10,338 11,865
Preference dividends - - - - - - -
Profit for period 4,837 4,855 8,741 7,656 7,296 10,338 11,865
Minority interest 0 0 0 0 0 0 0
Net profit 4,837 4,855 8,741 7,656 7,296 10,338 11,865
Extraordinaries/others 0 0 0 0 0 0 0
Profit avail to ordinary shares 4,837 4,855 8,741 7,656 7,296 10,338 11,865
Dividends (267) (267) (759) (773) (1,094) (1,551) (1,780)
Retained profit 4,570 4,589 7,981 6,883 6,201 8,787 10,085
Adjusted profit 4,764 4,925 8,741 7,656 7,296 10,338 11,865
EPS (Rs) 54.4 54.6 86.3 69.3 66.0 93.6 107.4
Adj EPS [pre excep] (Rs) 53.6 55.4 86.3 69.3 66.0 93.6 107.4
Core EPS (Rs) 54.4 54.6 86.3 69.3 66.0 93.6 107.4
DPS (Rs) 2.5 2.5 7.5 7.0 9.9 14.0 16.1

Profit & loss ratios

Year to 31 March 2019A 2020A 2021A 2022A 2023CL 2024CL 2025CL
Growth (%)
Revenue growth (% YoY) 24.0 (7.0) 20.3 3.2 11.8 14.6 10.3
Ebitda growth (% YoY) 31.6 (7.8) 67.1 (15.8) (10.5) 42.6 12.3
Ebit growth (% YoY) 33.7 (11.8) 77.4 (18.9) (13.3) 48.8 12.7
Net profit growth (%) 40.3 0.4 80.0 (12.4) (4.7) 41.7 14.8
EPS growth (% YoY) 40.3 0.4 58.0 (19.7) (4.7) 41.7 14.8
Adj EPS growth (% YoY) 36.4 3.4 55.8 (19.7) (4.7) 41.7 14.8
DPS growth (% YoY) 25.0 0.0 200.0 (6.7) 41.5 41.7 14.8
Core EPS growth (% YoY) 40.3 0.4 58.0 (19.7) (4.7) 41.7 14.8
Margins (%)
Gross margin (%) 31.6 33.7 33.7 31.0 27.8 29.5 29.5
Ebitda margin (%) 11.8 11.7 16.3 13.3 10.6 13.2 13.5
Ebit margin (%) 10.5 9.9 14.6 11.5 8.9 11.6 11.8
Net profit margin (%) 7.8 8.4 12.6 10.7 9.1 11.3 11.7
Core profit margin 7.8 8.4 12.6 10.7 9.1 11.3 11.7
Op cashflow margin (3.9) 14.2 16.1 3.0 9.1 9.8 8.9
Returns (%)
ROE (%) 17.4 14.9 19.7 11.5 8.9 11.6 12.0
ROA (%) 9.4 8.4 12.2 7.4 5.4 7.1 7.2
ROIC (%) 22.6 19.3 37.6 27.1 20.0 28.4 29.8
ROCE (%) 27.1 20.2 30.3 14.7 9.7 14.3 15.8
Other key ratios (%)
Effective tax rate (%) 32.9 24.0 24.5 25.1 25.2 25.2 25.2
Ebitda/net int exp (x) - - - - - - -
Exceptional or extraord. inc/PBT (%) - - - - - - -
Dividend payout (%) 4.6 4.6 8.7 10.1 15.0 15.0 15.0
Source: www.clsa.com

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 Losing the plot Escorts - SELL

Balance sheet (Rsm)

Year to 31 March 2019A 2020A 2021A 2022A 2023CL 2024CL 2025CL
Cash & equivalents 2,301 3,185 13,165 2,585 7,889 15,056 22,695
Accounts receivable 9,320 7,565 6,984 8,276 10,516 12,048 13,288
Inventories 8,219 8,222 6,745 8,036 8,984 10,293 11,352
Other current assets - - - - - - -
Current assets 19,840 18,972 26,894 18,896 27,388 37,397 47,335
Fixed assets 17,070 17,493 18,984 18,885 20,998 22,963 24,782
Investments 8,566 11,663 23,050 51,335 51,335 51,335 51,335
Goodwill 0 0 0 0 0 0 0
Other intangible assets 0 0 0 0 0 0 0
Other non-current assets 4,494 4,994 3,105 4,602 5,043 5,551 6,135
Total assets 49,969 53,121 72,032 93,717 104,764 117,246 129,586
Short term loans/OD - - - - - - -
Accounts payable 12,125 12,639 11,871 8,777 13,145 16,315 17,994
Accrued expenses - - - - - - -
Taxes payable 0 0 0 0 0 0 0
Other current liabs 3,478 4,058 4,748 4,767 5,244 5,768 6,345
Current liabilities 15,603 16,697 16,619 13,544 18,389 22,084 24,339
Long-term debt/leases/other 2,694 66 - - - - -
Convertible bonds - - - - - - -
Provisions/other LT liabs 1,444 1,557 1,498 1,392 1,392 1,392 1,392
Total liabilities 19,741 18,320 18,116 14,936 19,781 23,476 25,731
Share capital 1,226 1,226 1,348 1,319 1,319 1,319 1,319
Retained earnings - - - - - - -
Reserves/others 29,003 33,575 52,568 77,462 83,664 92,451 102,536
Shareholder funds 30,229 34,801 53,916 78,782 84,983 93,770 103,855
Minorities/other equity 0 0 0 0 0 0 0
Total equity 30,229 34,801 53,916 78,782 84,983 93,770 103,855
Total liabs & equity 49,969 53,121 72,032 93,717 104,764 117,246 129,586
Total debt 2,694 66 0 0 0 0 0
Net debt 393 (3,119) (13,165) (2,585) (7,889) (15,056) (22,695)
Adjusted EV 144,954 138,346 138,227 136,474 131,170 124,003 116,364
BVPS (Rs) 340.1 391.6 532.6 713.0 769.1 848.6 939.9

Balance sheet ratios

Year to 31 March 2019A 2020A 2021A 2022A 2023CL 2024CL 2025CL
Key ratios
Current ratio (x) 1.3 1.1 1.6 1.4 1.5 1.7 1.9
Growth in total assets (% YoY) 17.0 6.3 35.6 30.1 11.8 11.9 10.5
Growth in capital employed (% YoY) 39.3 2.8 33.2 91.8 0.6 1.5 2.5
Net debt to operating cashflow (x) (0.2) - - - - - -
Gross debt to operating cashflow (x) (1.1) 0.0 - - - - -
Gross debt to Ebitda (x) 0.4 0.0 - - - - -
Net debt/Ebitda (x) 0.1 - - - - - -
Gearing
Net debt/equity (%) 1.3 (9.0) (24.4) (3.3) (9.3) (16.1) (21.9)
Gross debt/equity (%) 8.9 0.2 0.0 0.0 0.0 0.0 0.0
Interest cover (x) 36.9 39.7 99.3 70.4 0.0 0.0 0.0
Debt cover (x) (0.9) 123.7 0.0 0.0 0.0 0.0 0.0
Net cash per share (Rs) (4.4) 35.1 130.0 23.4 71.4 136.3 205.4
Working capital analysis
Inventory days 58.7 78.6 59.5 54.7 53.8 54.5 55.5
Debtor days 45.1 53.5 38.3 38.9 42.9 44.9 45.8
Creditor days 104.9 118.3 97.4 76.4 69.3 83.2 87.9
Working capital/Sales (%) 3.1 (1.6) (4.2) 3.9 1.4 0.3 0.3
Capital employed analysis
Sales/Capital employed (%) 222.2 200.9 181.4 97.6 108.5 122.4 131.8
EV/Capital employed (%) 519.8 482.5 361.9 186.3 178.0 165.7 151.7
Working capital/Capital employed (%) 6.9 (3.2) (7.6) 3.8 1.5 0.3 0.4
Fixed capital/Capital employed (%) 61.2 61.0 49.7 25.8 28.5 30.7 32.3
Other ratios (%)
PB (x) 5.1 4.4 3.2 2.4 2.2 2.0 1.8
EV/Ebitda (x) 19.8 20.5 12.2 14.3 15.4 10.2 8.5
EV/OCF (x) (60.2) 16.9 12.4 62.9 18.0 13.8 12.9
EV/FCF (x) (37.1) 22.2 14.0 801.4 34.8 22.6 21.1
EV/Sales (x) 2.3 2.4 2.0 1.9 1.6 1.4 1.2
Capex/depreciation (%) 175.6 186.1 116.0 154.1 252.2 228.1 208.1
Source: www.clsa.com

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 Losing the plot Escorts - SELL

Cashflow (Rsm)
Year to 31 March 2019A 2020A 2021A 2022A 2023CL 2024CL 2025CL
Operating profit 6,479 5,713 10,135 8,216 7,122 10,601 11,946
Operating adjustments 185 334 709 1,105 0 - 0
Depreciation/amortisation 854 1,046 1,157 1,298 1,388 1,535 1,682
Working capital changes (7,539) 3,104 2,202 (7,265) 1,215 346 (627)
Interest paid / other financial expenses - - - - - - -
Tax paid (2,165) (1,741) (2,533) (2,539) (2,458) (3,483) (3,997)
Other non-cash operating items (220) (289) (481) 1,355 0 0 0
Net operating cashflow (2,407) 8,166 11,190 2,169 7,267 8,999 9,003
Capital expenditure (1,499) (1,946) (1,342) (1,999) (3,500) (3,500) (3,500)
Free cashflow (3,906) 6,221 9,848 170 3,767 5,499 5,503
Acq/inv/disposals 1,017 (2,784) (21,077) (17,762) - - -
Int, invt & associate div 346 431 451 1,046 2,631 3,219 3,916
Net investing cashflow (136) (4,298) (21,968) (18,715) (869) (281) 416
Increase in loans 2,268 (2,735) (112) (61) - - -
Dividends (222) (260) (245) (737) (1,094) (1,551) (1,780)
Net equity raised/others (129) (87) 10,494 18,924 0 0 0
Net financing cashflow 1,917 (3,082) 10,137 18,126 (1,094) (1,551) (1,780)
Incr/(decr) in net cash (626) 786 (641) 1,580 5,304 7,167 7,639
Exch rate movements - - - - - - -
Opening cash 2,927 2,398 13,806 1,005 2,585 7,889 15,056
Closing cash 2,301 3,185 13,165 2,585 7,889 15,056 22,695
OCF PS (Rs) (27.1) 91.9 110.5 19.6 65.8 81.4 81.5
FCF PS (Rs) (43.9) 70.0 97.3 1.5 34.1 49.8 49.8

Cashflow ratio analysis

Year to 31 March 2019A 2020A 2021A 2022A 2023CL 2024CL 2025CL
Growth (%)
Op cashflow growth (% YoY) (151.0) nm 37.0 (80.6) 235.0 23.8 0.0
FCF growth (% YoY) (209.2) - 58.3 (98.3) 2,112.2 45.9 0.1
Capex growth (%) 30.7 29.8 (31.0) 48.9 75.1 0.0 0.0
Other key ratios (%)
Capex/sales (%) 2.4 3.4 1.9 2.8 4.4 3.8 3.5
Capex/op cashflow (%) (62.3) 23.8 12.0 92.1 48.2 38.9 38.9
Operating cashflow payout ratio (%) - 2.7 6.8 35.7 15.1 17.2 19.8
Cashflow payout ratio (%) - 3.3 6.8 35.7 15.1 17.2 19.8
Free cashflow payout ratio (%) - 4.3 7.7 454.2 29.0 28.2 32.3

DuPont analysis
Year to 31 March 2019A 2020A 2021A 2022A 2023CL 2024CL 2025CL
Ebit margin (%) 10.5 9.9 14.6 11.5 8.9 11.6 11.8
Asset turnover (x) 1.3 1.1 1.1 0.9 0.8 0.8 0.8
Interest burden (x) 1.1 1.1 1.1 1.2 1.4 1.3 1.3
Tax burden (x) 0.7 0.8 0.8 0.7 0.7 0.7 0.7
Return on assets (%) 9.4 8.4 12.2 7.4 5.4 7.1 7.2
Leverage (x) 1.7 1.6 1.4 1.2 1.2 1.2 1.2
ROE (%) 17.4 14.9 19.7 11.5 8.9 11.6 12.0

EVA® analysis
Year to 31 March 2019A 2020A 2021A 2022A 2023CL 2024CL 2025CL
Ebit adj for tax 4,345 4,342 7,656 6,155 5,328 7,930 8,935
Average invested capital 19,269 22,538 20,388 22,727 26,703 27,962 29,994
ROIC (%) 22.6 19.3 37.6 27.1 20.0 28.4 29.8
Cost of equity (%) 11.4 11.4 11.4 11.4 11.4 11.4 11.4
Cost of debt (adj for tax) 6.0 6.8 6.8 6.7 6.7 6.7 6.7
Weighted average cost of capital (%) 11.4 11.4 11.4 11.4 11.4 11.4 11.4
EVA/IC (%) 11.2 7.9 26.2 15.7 8.6 17.0 18.4
EVA (Rsm) 2,149 1,772 5,332 3,564 2,283 4,742 5,516
Source: www.clsa.com

2 August 2022 hitesh.goel@clsa.com 19

 Important disclosures Escorts - SELL

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Companies mentioned
Escorts (ESCORTS IN - RS1,723.05 - SELL)
CNH Industrial (N-R)
Deere (N-R)
Eicher Tractors (N-R)
International Tractors Ltd (N-R)
Kubota (6326 JP - ¥2,260 - BUY)
Mahindra (MM IB - RS1,236.3 - BUY)
TAFE (N-R)

Analyst certification
The analyst(s) of this report hereby certify that the views expressed in this research report accurately reflect my/our
own personal views about the securities and/or the issuers and that no part of my/our compensation was, is, or will
be directly or indirectly related to the specific recommendation or views contained in this research report.

Important disclosures
Recommendation history of Escorts Ltd ESCORTS IN

Date Rec Target Date Rec Target

LATEST SELL 1,612.00 15 May 2022 BUY 1,987.00
24 May 2022 BUY 2,069.00 14 Mar 2022 BUY 2,196.00
Source: CLSA

2 August 2022 hitesh.goel@clsa.com 20

 Important disclosures Escorts - SELL

Recommendation history of Kubota Corp 6326 JP

Date Rec Target Date Rec Target

15 Feb 2021 BUY 3,100.00 12 May 2020 O-PF 1,600.00
08 Dec 2020 BUY 2,600.00 19 Sep 2019 O-PF 1,900.00
28 Sep 2020 BUY 2,300.00
Source: CLSA

Recommendation history of Mahindra & Mahindra Ltd MM IB

Date Rec Target Date Rec Target

09 Jul 2022 BUY 1,468.00 18 Mar 2021 BUY 1,150.00
28 Jun 2022 BUY 1,356.00 08 Feb 2021 BUY 1,135.00
07 Jun 2022 BUY 1,312.00 28 Jan 2021 BUY 1,010.00
31 May 2022 BUY 1,257.00 04 Jan 2021 BUY 910.00
24 May 2022 BUY 1,253.00 11 Nov 2020 BUY 790.00
30 Mar 2022 BUY 1,165.00 09 Aug 2020 BUY 730.00
11 Feb 2022 BUY 1,203.00 15 Jun 2020 BUY 605.00
15 Dec 2021 BUY 1,220.00 23 Apr 2020 BUY 412.00
31 May 2021 BUY 1,090.00 23 Sep 2019 SELL 510.00
20 May 2021 BUY 1,060.00 08 Aug 2019 SELL 495.00
Source: CLSA

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2 August 2022 hitesh.goel@clsa.com 21

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Escorts - SELL
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