Shares of Escorts were up 4 per cent to Rs 941 on the BSE on Monday after the company reported domestic tractor sales of 6,454 units for May. It had sold 6,488 units in the domestic market during the same month last year.
The stock of Escorts was trading higher for the fourth straight day. In the past one month, the stock has rallied 32 per cent, as compared to a 1.3 per cent fall in the S&P BSE Sensex. It was trading close to its record high level of Rs 1,019, touched on May 2, 2018.
“Escorts Agri Machinery Segment (EAM) in May 2020 sold 6,594 tractors against 6,827 tractors sold in May 2019. Export for the month of May 2020 at 140 tractors as against 339 tractors sold in May 2019,” Escorts said in a press release.
Analysts say tractors are likely to see relatively faster recovery in the second half of this fiscal. The segments benefit from a bumper Rabi production and the forecast of a normal monsoon, which augur well for rural incomes. For tractors, the sentiment is only moderately negative as agricultural activities are exempt from the lockdown, and as the prospects for the crop season are better.
“Tractor industry volumes are expected to recover sooner than other segments, led by pent-up demand and positive rural sentiment, owing to healthy Rabi output and expectations of good monsoon. Channel checks indicate expectations of a single-digit decline in FY21,” analysts at Emkay Global Financial Services said in sector update.
“We expect Escorts to sustain the market share in domestic tractors ahead, led by the continuation of aggressive marketing efforts, the success of its dual-brand strategy – Farmtrac and Powertrac series, and focus on network expansion,” the brokerage firm said. The stock was; however, trading above 12-month target price of Rs 898 per share.