Escorts Kubota Limited

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.

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.

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.

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%.

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.

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.