Escorts Kubota

Escorts Kubota reported a robust Q1 FY26 with standalone operating revenue from continuing operations at ₹2,483.4 crores. The company achieved an EBITDA of ₹325 crores, marking a 2.6% YoY increase, with the EBITDA margin expanding by 69 basis points to 13.1%. Net profit from continuing operations saw a significant 40.0% YoY jump to ₹372.6 crores, resulting in an EPS of ₹127.29 compared to ₹27.63 in the prior year. On a consolidated basis, revenue from continuing operations stood at ₹2,500.1 crores, with an EBITDA of ₹321.4 crores and a margin of 12.9%.

The Agri Machinery segment reported revenue of ₹2,181.5 crores, with an EBIT margin of 12.6%, up 92 basis points YoY, primarily due to softening material costs. While the total tractor industry volume (domestic plus export) grew by 8.7% YoY to 3.11 lakh tractors, Escorts Kubota's total volume was 30,581 units, a slight increase from 30,370 units YoY. Domestic volumes saw a marginal decline to 28,848 units, impacted by slow growth in northern and central regions. However, export volumes surged by 80.3% YoY to 1,733 tractors, with approximately 52% routed through the Kubota Global Network.

To counter regional disparities and strengthen market share, Escorts Kubota launched 'Promaxx' in the Farmtrac brand, which has shown positive trends in states where it was introduced, covering nearly 70% of the industry. The company also introduced the Kubota MU series (41-50 HP category) and plans to launch the 'Wetland series' under the Powertrac brand in coming quarters. These new products are expected to drive market share growth, with their full impact becoming visible in the next financial year, particularly in southern and eastern markets. Management believes these initiatives will help bridge the industry gap and improve market share in erstwhile weak markets.

The Construction Equipment segment faced significant headwinds, with served industry volume declining by approximately 14% YoY, and the crane industry specifically down by 29% YoY. The company's total volume in this segment was 1,055 machines, down from 1,382 YoY. Revenue for the segment decreased to ₹301.5 crores from ₹380.6 crores YoY, and the EBIT margin compressed sharply to 5.8% from 10.3% YoY. This margin pressure was attributed to the clearance of old emission norm inventory and the transition to new compliant products. Management expects demand to improve post-monsoon, with margins recovering to last year's levels in the second half of FY26.

During Q1 FY26, Escorts Kubota successfully concluded the divestment of its Railway Equipment business to Sona BLW Precision Forgings Limited (Sona Comstar). This transaction, effective from June 1, 2025, resulted in a profit after tax of ₹1,004.4 crores, which has been accounted for as income from discontinued operations in the financial statements. The divestment contributed significantly to the company's overall net profit, which stood at ₹1,400.2 crores including discontinued operations, and also increased the overall treasury surplus.

The company's organic capital expenditure for FY26 is projected to be in the range of ₹350-400 crores, in addition to investment for the land acquisition for a new Greenfield plant. However, the land acquisition process for the UP plant has faced delays of approximately six months from the government's side. Management anticipates the acquisition to be completed within this fiscal year, with construction commencing from the next fiscal year. The increased treasury surplus from the railway business sale provides additional funds for these investments.

While Q1 FY26 benefited from soft commodity prices, management noted that metal prices have started hardening, which is expected to impact tractor margins in Q2. However, the anticipated impact is projected to be less than 1%. For the full fiscal year, the company maintains its overall business margin guidance in the range of 12%-12.5%. The agri machinery segment saw a 92 bps improvement in EBIT margin to 12.6% due to softening material costs, while the construction equipment segment's margin was adversely affected by inventory clearance.