Escorts Kubota's ride is bumpy amid demand concerns

Escorts Kubota Ltd continues to grapple with the challenges of weak export volumes and subdued construction equipment demand.

- Nishant Sasne

The company's H1FY25 figures paint a bleak picture: total tractor volumes fell 3.6% year-on-year (y-o-y) with domestic volumes declining 2.5%. Construction equipment volume dropped 12.6%, and railway segment revenue contracted by 14.3%.

However, the company expects demand trends to remain buoyant during H2FY25, going by its recent interactions with analysts at Kotak Institutional Equities.

"As per the company, domestic tractor industry is on track to achieve mid-single digit y-o-y growth in FY25. The company expects demand trends to remain buoyant during H2FY25, driven by high single-digit volume growth achieved during the festive season; continued recovery in southern and central regions due to higher reservoir levels; increase in MSP (minimum support price); and favourable terms of trade and base," said a Kotak report on 16 December.