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Escorts Kubota's CFO anticipates an 8-10% growth in tractor sales during the festive season, which typically accounts for 40-45% of annual sales. This year, the industry is expected to reach around 325,000 tractors, with a notable retail sales increase of over 50% in October following a muted September. The positive trend is attributed to good monsoon conditions and increased stocking by channel partners.
SONA BLW Precision Forging reported a strong 2QFY25 performance with revenues of INR 9.3 billion, surpassing estimates, driven by order execution and growth in the BEV sector. The company plans to acquire Escorts Kubota’s railway equipment division for INR 16 billion, expected to be EPS-accretive from the first year. Despite a 20% YoY PAT growth, valuations at ~60x/48x FY25E/FY26E EPS suggest limited upside, leading to a Neutral rating with a target price of INR 685.
Shares of Escorts Kubota fell over 6% after the company announced the sale of its railway equipment business to Sona BLW Precision Forgings for Rs 1,600 crore. This move aligns with the firm's strategic focus on the agri- and construction equipment sectors, aiming to simplify operations and enhance efficiency. As of 12:10 PM, shares were trading at Rs 3,459.65, down 6.5% on the NSE.
Sona Comstar is set to acquire the railway equipment division of Escorts Kubota for Rs 1,600 crore, a move expected to boost earnings from the first year. This division, a key supplier of railway components like brakes and suspension systems, reported revenues of approximately Rs 950 crore in FY24. The acquisition aligns with Sona Comstar's strategy to expand into the mobility sector and enhance its clean mobility product offerings.
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