Escorts Kubota Limited — Q3 FY26 earnings call

Call held 10 Feb 2026

Management summary

Escorts Kubota delivered a strong Q3 FY26, with standalone operating revenue growing 11.1% YoY to ₹3,261.4 crores and adjusted net profit surging 38.3% YoY to ₹401.6 crores, marking its highest-ever quarterly PAT. This performance was bolstered by robust tractor volumes, which increased 13.5% YoY, and significant margin expansion in the Agri Machinery segment. While the Construction Equipment segment experienced an industry-wide volume decline, management noted signs of stabilization and expressed optimism for future growth driven by government infrastructure spending and strategic product launches, despite facing commodity price pressures.

Highlights

  • Standalone Operating revenue from continuing operations: Rs.3,261.4 crores, up by 11.1% YoY.

  • Standalone EBITDA: Rs.438.7 crores, up by 30.9% YoY.

  • Standalone EBITDA margins: 13.5%, up 203 basis points YoY.

  • Adjusted standalone net profit: Rs.401.6 crores, up by 38.3% YoY (highest-ever quarterly PAT).

  • Total tractor volume: 36,955 tractors, up by 13.5% YoY.

  • Agri Machinery EBIT margin: 13.5%, up 310 basis points YoY (from 10.4%).

  • Construction Equipment EBIT margin: 6.6%, up 280 basis points QoQ (from 3.8%).

  • Special dividend of Rs.18.0 per equity share declared on completion of railway business divestment.

Concerns

  • One-time impact of new labor code of Rs.52.5 crores on standalone net profit.

  • Construction Equipment industry volume declined by approximately 16% YoY in Q3 FY26.

  • Commodity price pressure, especially from copper, aluminum, and steel, led to inflation higher than price increases in the CE segment.

  • Kubota brand market share struggled due to a limited product portfolio and higher pricing compared to local competition.

Key financials

  1. Operating Revenue (Standalone) ₹3,261.4 Cr +11.1%YoY
  2. EBITDA (Standalone) ₹438.7 Cr +30.9%YoY
  3. EBITDA Margin (Standalone) 13.5% +2%YoY
  4. PBT (Standalone) ₹522.7 Cr +37.5%YoY
  5. Net Profit (Standalone) ₹362.4 Cr +24.7%YoY
  6. Adjusted Net Profit (Standalone) ₹401.6 Cr +38.3%YoY
  7. EPS (Standalone) ₹32.93 +12%YoY
  8. Revenue (Consolidated) ₹3,280.5 Cr +11.3%YoY
  9. EBITDA (Consolidated) ₹434.7 Cr
  10. EBITDA Margin (Consolidated) 13.3% +2%YoY
  11. Net Profit (Consolidated) ₹358.3 Cr +11.8%YoY

What they filed

Q1 FY27: revenue up 28.0%, net profit down 72.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,265 2,935 2,430 2,483 2,777 +23%3,261 +11%2,951 +21%3,179 +28%
EBITDA233 335 293 325 363 +56%439 +31%386 +32%355 +9%
Net profit327 323 298 1,400 321 −2%362 +12%325 +9%387 −72%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹3,259.5 Cr Total
  • Agri Machinery ₹2,769.6 Cr 85.0%
  • Construction Equipment ₹489.9 Cr 15.0%

Order book

low confidence

Pipeline

other

Order requirements and good order book from Europe; Promaxx series order inflow exceeding current supply level.

Order inflow for Promaxx series exceeds current supply, and the order book from Europe is good, indicating strong demand for certain products.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Land acquisition for Greenfield facility
    • Indicative investment for tractor and construction equipment plant in Greenfield facility (DPR figure) UNDISCLOSED 22.68 Mn
    • Putting up a line for transmission for harvesters in existing facility
    • Setting up a mother warehouse for spare parts
    Board has consented the investment for the CAPEX for acquiring the land. And also, there is a mention about the indicative investment of 22.68 million. ... So, which is why the investment which is approved by the board right now is only for the land acquisition. The investment which you have mentioned in the DPR or the project report which has been submitted to UP government is more like indicative. And that assumes certain capacities which will be built up right now for tractor and construction equipment plant in the Greenfield facility. ... So, we intend to put up a spare part warehouse, which will be a mother warehouse. ... we are putting up a line for transmission for the harvesters in the existing facility and that has started production.
  • Dividend ₹18/share (special)
    The board of directors has declared a one-time special dividend of Rs.18.0 per equity share of face value Rs.10 on completion of the railway business divestment.

Guidance & targets

Volume

  • Domestic Tractor Industry Volume Volume · this fiscal year (FY26) · High confidence 11.5 lakh units
    Domestic tractor industry is likely to reach a new peak of around 11.5 lakh units this fiscal year.

    — Prateek Singhal

  • Tractor Export Growth Volume · going forward · Medium confidence double-digit growth
    but still we expect it will continue to be double-digit growth in export numbers going forward even from the existing facility.

    — Bharat Madan

  • Construction Equipment Degrowth Volume · coming months and fiscal · High confidence gradual improvement and stabilization
    thus showcasing early sign of stabilization and we expect this gradual improvement to continue with the timely awarding of key infrastructure projects and better on-ground execution momentum.

    — Prateek Singhal

Market Share

  • Kubota Brand Market Share Market Share · from H2 onwards · Medium confidence gradual increase
    So, we will see a gradual increase in market share in Kubota, I think from H2 onwards.

    — Neeraj Mehra

Growth

  • Construction Equipment Industry CAGR Growth · till FY30 · High confidence 6%-7%
    I think the CAGR has always been 8%-9% and it is expected to grow at about 6%-7% till FY30.

    — Sanjeev Bajaj

  • Cranes and Mini Excavators Growth Growth · next year · Medium confidence faster growth
    Within our product range, we believe that cranes will grow faster. And at the same time, mini excavator has already shown signs of growth in this year and it will continue to grow next year also.

    — Sanjeev Bajaj

  • Backhoe Loader and Compactors Growth Growth · High confidence 5%-6%
    Backhoe loader and compactors will grow at a nominal rate of about 5%-6%.

    — Sanjeev Bajaj

Capacity

  • Greenfield Plant Commercial Production Capacity · first commercial production · High confidence 2029-30
    Right now, what we indicated to the government is to start this somewhere in 2029-30, the first commercial production.

    — Bharat Madan

Product Portfolio

  • Kubota Brand Full Product Range Product Portfolio · to come · Medium confidence 1-1.5 years
    Although the Indian platform will still take, I think, what year, year and a half to really come, we will get a complete range under that brand name.

    — Bharat Madan

What to watch in Q4 FY26

Tractor Industry Growth (Q4 FY26)

next quarter
Current Robust growth expected in Q4 FY26
Target Quantified growth rate for Q4 FY26

Why it matters

Verifies management's short-term optimism for the tractor segment and its contribution to overall performance.

So, at this point of time, it is very early to comment on financial year '27, but we see a robust growth in Quarter 4 and also a very robust growth in Quarter 1.

Risks & concerns

  • Construction Equipment industry volume decline

    medium

    The CE industry volume declined by approximately 16% YoY in Q3 FY26, though showing signs of stabilization.

    Management acknowledged

  • Commodity price inflation

    medium

    Rising prices of copper, aluminum, and steel led to inflation higher than price increases, particularly impacting CE margins, with further corrections intended.

    Management acknowledged

  • Kubota brand market share challenges

    medium

    Kubota brand struggled due to a limited product portfolio, reliance on imported components leading to higher costs, and higher pricing compared to local competition.

    Management acknowledged

  • One-time impact of new labor code

    low

    A one-time impact of Rs.52.5 crores on net profit was recorded due to the new labor code.

    Management acknowledged

  • Regional disparity and limited model availability in Tractor segment

    low

    North and Central markets underperformed, and limited availability of key models impacted sales momentum, despite overall domestic growth.

    Management acknowledged

Q&A highlights

7 direct
FY27 Tractor Outlook and Impact of State Subsidies Partial
So, at this point of time, it is very early to comment on financial year '27, but we see a robust growth in Quarter 4 and also a very robust growth in Quarter 1.

Analysts are concerned about the sustainability of growth in FY27 given the role of subsidies, but management defers specific guidance while expressing short-term optimism.

Asked by Gunjan Prithyani from Bank of America

Export Business Scale-up and Greenfield Plant Strategy Direct
The new Greenfield plant was more meant for shifting some of the key models from Kubota system in other countries to India. So, that will take some time, but the normal export which is happening to the other countries within Kubota network also that will continue. So, we do expect the momentum should continue in export, even though the base now is slightly becoming higher. So, you would not see the similar growth of 50%-60% what you see now, but still we expect it will continue to be double-digit growth in export numbers going forward even from the existing facility.

Clarifies the strategic purpose of the new Greenfield plant (model shifting) and provides a realistic outlook for export growth from existing facilities.

Asked by Gunjan Prithyani from Bank of America

Commodity Price Pressure and Pricing Actions Direct
On construction equipment, we have seen quite an impact this quarter. So, from January itself, I think we have seen the steel prices have gone up. So, which we have taken some price increase in the CE space, but I think the inflation was way more than what we had increased. So, there is some correction which we intend to do in the prices in the construction equipment space. On tractor, I think we will have to wait and watch and see what is the final outcome coming.

Highlights the ongoing margin pressure from rising commodity prices, particularly in CE, and management's intent for further price corrections, indicating potential future price hikes.

Asked by Gunjan Prithyani from Bank of America

Construction Equipment Industry Growth Outlook Direct
But, if you look at the five years period, I think the CAGR has always been 8%-9% and it is expected to grow at about 6%-7% till FY30. 20%-30% will be a big ask from the industry. ... if the investments from the government continue, we believe that next year is going to be a turnaround year for construction equipment.

Provides a realistic long-term CAGR for the CE industry and outlines factors that could lead to a turnaround in the next fiscal year, managing expectations for high growth.

Asked by Mitul Shah from Pantomath Financial Services

Greenfield Plant CAPEX Timelines and Scope Direct
So, which is why the investment which is approved by the board right now is only for the land acquisition. The investment which you have mentioned in the DPR or the project report which has been submitted to UP government is more like indicative. And that assumes certain capacities which will be built up right now for tractor and construction equipment plant in the Greenfield facility. ... Right now, what we indicated to the government is to start this somewhere in 2029-30, the first commercial production.

Clarifies that the immediate board approval is only for land acquisition, and the larger indicative investment and commercial production timeline (2029-30) are for the full plant, subject to demand.

Asked by Mumuksh Mandlesha from Anand Rathi Shares and Stock Brokers Limited

Kubota Brand Localization Strategy for Margin Improvement Direct
So, I think there is a plan to introduce the Indian platform under Kubota brand name. So, that will be using Indian engines only. So, the idea is to expand the margin by localizing those products. ... So, that is the first priority. But there, the volumes will pick up and the margins can be at par with the Indian product line, so, which is what we are trying to do first.

Outlines the strategic approach to improve Kubota brand margins and competitiveness by localizing production with Indian engines and expanding the product portfolio.

Asked by Mumuksh Mandlesha from Anand Rathi Shares and Stock Brokers Limited

Impact of EU FTA on Tractor Exports Direct
See, Europe we are already exporting and today the duty on tractor in Europe is zero. So, there is not going to be any impact of any FTA which we sign with the EU, the bilateral agreement which is signed. So, that it does not have any significant impact on the tractor industry per se. This will impact some of the component exports probably for the auto component manufacturers from India. But on tractor, it is not going to be any significant impact.

Corrects a common misconception, clarifying that the EU FTA will not materially impact tractor exports due to existing zero duties, but may affect component exports.

Asked by Jinesh Gandhi from Oaklane Capital

Applicability of PLI Scheme for Construction Equipment Direct
So, if you are referring to the latest announcements in the budget about PLI, these are primarily export-substitution equipment. So, equipments which are currently are largely imported, say, for example, tunnel boring machines, we do not produce in India and it is being imported 100%. ... That is the direction and that does not apply to us, because we are not in those segments as of now.

Clarifies that the recently announced PLI scheme for CE is focused on import substitution for specific, currently imported equipment, and does not apply to Escorts Kubota's current product segments.

Asked by Ayush Anand from Parascap Ventures

3 min read 6 chapters

Detailed narrative

Strong Q3 FY26 Financial Performance

Escorts Kubota reported a robust Q3 FY26, with standalone operating revenue from continuing operations growing 11.1% YoY to ₹3,261.4 crores. EBITDA increased significantly by 30.9% YoY to ₹438.7 crores, leading to an EBITDA margin of 13.5%, a 203 basis points expansion YoY. The company achieved its highest-ever quarterly adjusted net profit of ₹401.6 crores, marking a 38.3% YoY increase, despite a one-time impact of ₹52.5 crores from a new labor code.

Tractor Business Momentum and Market Dynamics

The total tractor industry (domestic plus export) grew 23% YoY to 3.5 lakh tractors in Q3 FY26, with the domestic industry alone reaching 3.3 lakh units (up 23.2% YoY). Escorts Kubota's total tractor volume increased by 13.5% YoY to 36,955 units, with domestic sales at 35,373 tractors (up 12% YoY). The company expects the domestic tractor industry to reach a new peak of around 11.5 lakh units this fiscal year, supported by favorable government policies and healthy agricultural conditions. Export volumes for the company also saw significant growth, up approximately 63% YoY to 1,582 tractors, with 68% of these sales going to the Kubota Global Network.

Construction Equipment Segment: Challenges and Stabilization

The Construction Equipment (CE) industry experienced a volume decline of approximately 16% YoY in Q3 FY26, primarily due to a higher base from pre-buying ahead of emission norm changes and extended monsoons. Escorts Kubota's CE volume was 1,716 machines, a 5% YoY decline, but showed a strong sequential recovery, up 49.7% QoQ. The company noted a gradual reduction in degrowth, from 23.7% in Q1 to 3.7% in January, indicating signs of stabilization. Management is optimistic about a turnaround in the next fiscal year, driven by increased public capital expenditure (Rs.12.2 lakh crores in Union Budget 2026-27) and new infrastructure projects.

Strategic Initiatives: Product Launches and Localization

Escorts Kubota is actively expanding its product portfolio, having launched the Kubota U22-6 Mini-Excavator and showcased prototypes for Hydra 15 Mining, BLX-75K backhoe loaders, and Hydra-72 cranes. In the agri-solutions business, Next-Gen Rice Transplanters (KA6 and KA8 models) were introduced. The company plans to launch new models and upgrades across all brands in the next six to eight months, with the full market impact expected by the end of FY27. A key strategy for the Kubota brand involves introducing an Indian platform using Indian engines to localize products, aiming to improve margins and expand the addressable market from 40-50% to 70-80%.

Capital Allocation for Future Growth: Greenfield Plant

The board has approved investment for land acquisition for a new Greenfield facility. While the specific amount for land acquisition was not disclosed, an indicative investment of 22.68 million (currency unspecified, likely INR crores) is mentioned in the DPR for a tractor and construction equipment plant. Commercial production at this new facility is targeted to commence around 2029-30, with flexibility for pre-ponement or postponement based on demand. This expansion aims to address current space constraints and consolidate some existing Faridabad facilities.

Commodity Headwinds and Pricing Actions

The company faced commodity price pressures in Q3 FY26, particularly from rising copper, aluminum, and steel prices, which increased from January. While the tractor segment saw minimal impact, the Construction Equipment segment experienced significant pressure. Escorts Kubota implemented some price increases in the CE space, but inflation was higher than the increases. Management intends to undertake further price corrections in the CE segment to mitigate margin pressure, acknowledging a quarter-long lag in negotiating prices with suppliers and considering competitive responses.

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