Escorts share price touches new high as stock jumps 9 per cent

Stock price of Escorts Limited, the farm equipment, and engineering products maker, has been a major boost for investors, nearly doubling their investment in a period of five months. The stock today touched a 52-week-high of Rs 852.80 jumping more than 9 per cent during the day’s trade.

Escorts limited stock price jumped 9.33 per cent to end the day at a price of Rs 846

Escorts Limited posted a strong third-quarter result last week on the back of stability in volumes, the benefit of mix improvement and cost savings all of which the company is looking to factor in and keep the upward trajectory in the coming quarter, according to analysts at Motilal Oswal. Motilal Oswal said that it has upgraded the EPS estimates by ~9%/5% for FY20/FY21, but maintains Neutral rating adding that the expected recovery is already priced in.

Emkay Global has upgraded the company’s FY21-22E EPS by 12% each to Rs 60.8/Rs 72.9 on higher volume and margin assumptions. “ESC is likely to see 11% revenue CAGR over FY20-22E, led by a revival in Tractors and continuing robust growth in Railways. We expect ESC to gain 30bps share in tractors over FY20-22E, driven by network expansion, launches and focused marketing efforts,” said a senior research analyst from Emkay Global.

Emkay experts pegged the target price for the stock at Rs 1,000 in the coming 12 months while HSBC sees the stock price touch Rs 900. Motilal Oswal said that it is upgrading the EPS estimates by 9%/5% for FY20/FY21 to reflect the improving outlook for tractor volumes, improving mix and cost savings and has kept the target price at Rs 782.

The company operates in the sectors of agri-machinery, construction and material handling equipment, and railway equipment. The jump in the share price of escorts is also helped by the positive commentary made by the company management post-quarter three results. “The company expects some recovery to continue in Q4 in the tractor segment,” the company said.

BSE Sensex ended the day up 136.78 points or 0.34 per cent at 39,872 points, while Nifty 50 was up 62.20 points or 0.53 per cent at 11,724 points.

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