01 — At a Glance
The Tractor Company That Kubota Bought. Now It’s Printing Records.
- 52-Week High / Low₹4,180 / ₹2,776
- Q3 FY26 Revenue₹3,280 Cr
- Q3 FY26 PAT (Consolidated)₹358 Cr
- Annualised EPS (Q3×4)₹128.12
- Full-Year FY25 EPS₹113.06
- Book Value₹1,062
- Price to Book3.02x
- Debt / Equity0.01x
- EBITDA Margin (Q3)13.3%
- Special Dividend₹18/share
Auditor’s Opening Note: Escorts Kubota closed Q3 FY26 with ₹3,280 crore consolidated revenue (+11.3% YoY), adjusted PAT of ₹401.6 crore (+38.3% YoY), and highest-ever quarterly EBITDA of ₹434.7 crore. That’s not a typo. They’re farming profits. Railway business sold for ₹1,601 crore. Special dividend of ₹18/share declared. Stock down -10.4% in 3 months despite all this. Welcome to the agri-tractor circus where fundamentals lose to macro fear every single quarter.
02 — Introduction
Welcome to the Land of Tractors, Kubota Money, and Very Confused Stock Prices
Escorts Kubota is one of India’s oldest engineering conglomerates. Founded in 1944 in Lahore (and relocated post-Independence), they’ve been building tractors, construction equipment, and for a long time — railway components. Your grandfather drove a Farmtrac. Your uncle bought a Powertrac. Now Kubota Corporation of Japan owns 54.07% of the company and is pumping capital to make India a global sourcing hub for mid-range tractors.
In August 2024, two Kubota joint ventures merged with Escorts, bumping Kubota’s stake to 54.07%. Then in Q3 FY26, they sold the entire Railway Equipment division to Sona BLW Precision Forgings for ₹1,601 crore — a profitable business generating 16–18% EBIT margins just got exited. Why? Because the PE parent wants to hyper-focus on tractors and agri-machinery. Diversification is a burden. Focus is the playbook.
And it’s working. Q3 FY26 delivered record revenue, record EBITDA, record adjusted profits. Domestic tractor volumes up 12% despite the industry growing at 23%. Exports up 63% YoY. Margin expansion across the board. A ₹18/share special dividend paid. Yet the stock is down 10% in three months. Welcome to the paradox: great execution meets macro fear. Let’s untangle it with data, humour, and the kind of insight you wish you got from your fund manager.
Concall Note (Feb 2026): Management called Q3 FY26 “highest-ever quarterly EBITDA” and “highest-ever adjusted quarterly PAT.” Same management also said “very early to comment on FY27 growth” and “visibility remains constrained by monsoon patterns.” Translation: We’re killing it now, but nobody can predict farm-based growth 6 months out.
03 — Business Model: Three Pillars, One Being Euthanized
They Build. They Sell. They’re Now Focusing HARD on Tractors.
Pre-Q3 FY26, Escorts operated in three segments: Agri Machinery (70–76% of revenue), Construction Equipment (14–19%), and Railway Equipment (10–11%). That’s changed. Railway Equipment is gone — divested to Sona BLW in Q3. So now it’s two-pillar: Agri and Construction Equipment.
Agri Machinery is the cash cow. Domestically, Escorts/Kubota/Farmtrac/Powertrac sell small-to-mid-range tractors (18–110 HP) to Indian farmers. They hold ~11% market share in a market of 3.3 lakh units annually. Not market leader (that’s Mahindra at ~35%), but consistent, profitable, and growing faster than the industry. Exports are ramping: only 5% of sales today, but Kubota’s global distribution network is being leveraged to grow by 50%+ YoY. Margin: 13.5% EBIT in Q3, up 310 bps YoY.
Construction Equipment is the complicated child. Pick-and-carry cranes, backhoe loaders, mini-excavators, compactors — all manufactured in a facility now facing infra headwinds. Industry volumes were down ~16% YoY in Q3 due to delayed project awards, extended monsoons, and pre-buying in FY25 ahead of new emission norms. Company volumes down 13.7% YoY in Q3 (but improving from -23.7% in Q1). Margin: 6.6% EBIT, down from 11% YoY (commodity inflation). Management expects stabilization in Q4 and growth from FY27 as infrastructure capex ramps. Probably.
Domestic Tractor Share10.9%Improving in East/North
Export Growth (Tractors)+63%YoY Q3; via Kubota net
Kubota’s Ambition: Management wants to leverage Kubota’s distribution to grow exports from 5% to 15–20% of total agri sales within 3–4 years. They’re also developing Indian-made Kubota-branded tractors to address the 40–50% addressable market gap (currently only 2 models, mostly imported). Current Kubota tractors cost 30%+ more due to import costs — local sourcing will change that.
💬 Question: If Kubota-brand tractors are so import-heavy and uncompetitive, why did Kubota invest ₹10,000 crore to acquire Escorts? Drop your theory in the comments!
04 — Financials Overview
Q3 FY26: The Numbers That Scare The Bears
Result type: Quarterly Results | Q3 FY26 EPS (Consolidated): ₹32.03 | Annualised EPS (Q3×4): ₹128.12 | Full-year FY25 EPS: ₹113.06
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue (Consolidated) | 3,280 | 2,948 | 2,792 | +11.3% | +17.5% |
| EBITDA | 435 | 349 | 360 | +24.6% | +20.8% |
| EBITDA Margin % | 13.3% | 11.8% | 12.9% | +150 bps | +40 bps |
| PAT (Reported) | 358 | 320 | 318 | +11.8% | +12.6% |
| EPS (₹) | 32.03 | 28.66 | 28.44 | +11.8% | +12.6% |
Normalized PAT & Why You Should Care: Reported Q3 PAT of ₹358 Cr looks less impressive than adjusted PAT of ₹401.6 Cr due to a one-time labour code cost of ₹52.5 Cr. Strip that out and growth is +38.3% YoY. Revenue growth of 11.3% is real; EBITDA margin of 13.3% is best-in-class for agri-machinery. Annualised EPS of ₹128.12 puts the current P/E at 24.8x (not the reported 27.3x). The gap matters when you’re valuing cyclicals.
05 — Valuation: When Good Companies Sit at Bad Prices
Fair Value Range — Three Methods, One Consensus
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