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Neutral on Escorts, target price Rs 1300: Motilal Oswal

Motilal Oswal has neutral call on with a target price of Rs 1300. The current market price of Escorts Ltd. is Rs 1129.5.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 2270.65 Crore, up 8.60 % from last quarter Total Income of Rs 2090.93 Crore and up 60.36 % from last year same quarter Total Income of Rs 1415.95 Crore. Company reported net profit after tax of Rs 270.65 Crore in latest quarter.


Investment Rationale
Valuations at 13.8x/12.5x consolidated EPS largely reflect strong growth and its partnership with Kubota. The stock is trading at a premium to its 10-year average of 10x. The brokerage lowers target P/E multiple to 14x (from 15x earlier and at a premium to its five-year average of 12.4x) to factor in near peak cyclical earnings in FY23E.


Promoter/FII Holdings
Promoters held 36.6 per cent stake in the company as of March 31, 2021, while FIIs held 28.1 per cent, DIIs 5.6 per cent and public and other 29.7 per cent.

(Views and recommendations given in this section are the analysts’ own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the stock/s mentioned.)

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