Escorts Kubota has decided tractors are sexier than trains—so it sold off its Railways Equipment division to Sona Comstar in June 2025. With 11.6% domestic tractor market share, Kubota’s Japanese infusion, and an ambitious 3 lakh tractor capacity plan by FY28, the company is revving like a Desi JCB at a shaadi. Q1FY25 revenue: ₹2,500 Cr (-2.9% YoY), PAT: ₹312 Cr (+18%). P/E at 35x is riding like an overpriced Mahindra Thar—attractive, but you’ll need patience to justify the splurge.
2. Introduction
Escorts Kubota (EKL) is no longer your dadaji’s tractor maker. It’s now an Indo-Japanese joint production where the old Escorts DNA meets Kubota’s global muscle. The company runs three big engines:
Agri Machinery (70% of FY24 sales): The tractors, implements, and lubes—basically the muscle of rural India.
Construction Equipment (19%): Cranes, compactors, loaders—designed for builders who want to look busier than they are.
Railway Equipment (11% until FY24): Sold off to Sona Comstar because apparently choo-choo wasn’t cool anymore.
Kubota now owns 53.5%, making Escorts more Japanese than Gurgaon’s cyber city sushi joints. The “Mid-Term Business Plan” targets 2.5x revenue by FY28 through R&D and brand synergy (Kubota, Farmtrac, Powertrac).
But here’s the spicy bit: Despite capacity expansions, PAT is growing faster than sales (21% CAGR over 5 years vs sales at 12%). Translation—other income of ₹1,720 Cr in FY25 is doing heavy lifting, making Escorts Kubota less farmer’s friend, more financial juggler.
3. Business Model – WTF Do They Even Do?
Escorts Kubota has three avatars:
Agri Machinery (tractors): Think of them as the Salman Khan of rural India—loud, visible, and market-share hungry. Capacity utilization at 80% in FY24, now expanding with a Rajasthan plant. Market share up to 11.6% (FY24) from 10% (FY23). Kubota tractors are the NRI cousins, while Farmtrac & Powertrac are desi heroes.
Construction Equipment: With 39% market share in cranes, Escorts Kubota is basically the Shahenshah of India’s crane market. Compactors (8% share) and BHLs (1% share) are side characters. Capacity utilization ~70% in FY24.
Railways (RIP): Once a ₹950 Cr order book in brake systems and couplers. But sold to Sona Comstar in June 2025. Classic corporate divorce: “It’s not you, it’s just margins.”
Add to this a sprinkling of R&D under Rajan Nanda Innovation Lab, dabbling in EVs and digital tech. The plan? Move beyond tractors into future mobility—though rural India still prefers diesel to data.
4. Financials Overview
Metric
Latest Qtr (Q1FY25)
YoY Qtr (Q1FY24)
Prev Qtr (Q4FY25)
YoY %
QoQ %
Revenue
₹2,500 Cr
₹2,574 Cr
₹2,445 Cr
-2.9%
2.2%
EBITDA
₹321 Cr
₹315 Cr
₹287 Cr
2.0%
11.9%
PAT
₹312 Cr
₹302 Cr
₹318 Cr
3.3%
-1.9%
EPS (₹)
124.9
118.7
28.5 (quarterly)
5.2%
Flat
Commentary:
Revenue dipped, but PAT up thanks to cost control and a magical ₹1,260 Cr other income.
EPS looks inflated because of non-core income—without that, growth is decent, not dazzling.
Question: Should tractors get credit for profits, or should we thank Escorts’ side hustle in treasury gains?
5. Valuation Discussion – Fair Value Range
Method 1: P/E
Industry P/E = ~39. Escorts at 35x. EPS FY25E (annualized) = ~₹211. Fair Value Range = 28x–36x = ₹5,900–₹7,600.
Method 2: EV/EBITDA
EV = ₹40,277 Cr. FY25E EBITDA = 1,171 Cr (TTM). EV/EBITDA = 34.4x vs peers 20–25x. Fair Range = 20–25x → Value = ₹23,400–₹29,300 Cr EV → Equity = ₹24,000–₹30,000 Cr → Per Share = ₹2,150–₹2,700.
