Company Update: Escorts Ltd - Kotak sec
Despite delayed onset, monsoon forecast for the current year remains favorable. Post two consecutive years of decline, the domestic tractor industry looks well positioned to witness recovery in demand in FY17. Apart from the tractor industry, the company is also witnessing volume traction in the construction equipment segment. We believe healthy volume growth in these segments and cost saving initiatives by the management can translate into strong improvement in EBITDA margin for the company. We rate the stock ACCUMUALTE (earlier BUY) with revised price target of Rs244 (earlier Rs196). Lower than expected tractor sales growth can have substantial impact on our earnings estimates and target price.
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