Escorts Q1 net profit rises nearly 6% YoY; tractor sales fall 14%

Escorts, on July 27, reported a 5.6 percent year-on-year (YoY) rise in consolidated net profit at Rs 92.6 crore for the quarter ended June 30, 2020.

The company had reported a net profit of Rs 87.7 crore in the corresponding quarter of the previous financial year.

Consolidated revenue from operations, however, declined 24.4 percent YoY to Rs 1,089.3 crore in Q1FY21 against Rs 1,440.5 crore in Q1FY20.

The company saw a 14.35 percent YoY decline in Q1 EBIDTA at Rs 122 crore, but the EBIDTA margin improved to 11.2 percent from 9.9 percent YoY.

Earnings per share (EPS) also improved to Rs 10.78 for Q1FY21, up 5.3 percent from Rs 10.23 of Q1FY20.

On a standalone basis, the company's Q1FY21 PAT improved 5.3 percent YoY to Rs 92.2 crore but revenue fell 25.4 percent YoY to Rs 1,061.6 crore.

Standalone Q1 EBIDTA fell 16 percent YoY to Rs 119.6 crore while EBIDTA margin rose 126 bps to 11.3 percent.

Tractor sales for the quarter ended June 2020 were 18,150 units against 21,051 tractors in the corresponding period last fiscal, down 13.8 percent YoY. Segmental revenues came at Rs 953.5 crore in the quarter ending June 2020 as against Rs 1,092 crore in the corresponding period last fiscal, Escorts said.

Despite lower volumes, EBIT margins for the agri-machinery business went up by 356 bps to 14.5 percent against 10.9 percent in the same quarter of last year due to improved product mix, lower costs and continued soft commodity prices.

Construction equipment sales volume for the quarter was at 234 machines as against 1,067 machines in the corresponding period last fiscal.

Segmental revenues came at Rs 52.5 crore in the quarter ending June 2020 as against Rs 212.2 crore in the corresponding period last fiscal.

The company said most of the sales were recorded in the last month of the quarter due to nationwide lockdown in April and May, resulting in EBIT for the quarter ended June 2020 at negative Rs 16.8 crore as against Rs 5.4 crore in the corresponding period.

For the railway equipment division, revenue for the quarter was at Rs 54.9 crore as against Rs 118.1 crore in the year-ago period. EBIT margin declined to 2.6 percent in the June quarter as compared to 20 percent in the last year same quarter.

"Due to the outbreak of COVID-19 pandemic and resultant lockdown, the production of coaches and locomotive across all railway units has been affected badly. The current order book as of 30th June 2020, is more than Rs 480 crore that will be executed in the next 12-15 months," Escorts said.

"In this prolonged pandemic, we are trying to find new and innovative ways to connect with our customers and providing them with uninterrupted product distribution and service," Chairman and Managing Director Nikhil Nanda said.

"Amidst the challenging environment, while we have witnessed a faster revival in our agriculture business this quarter, our construction and railway business have been impacted because of lockdown across geographies. Hopefully, we will see a recovery soon as the current market situation gets better and the economy across layers improves."

Nanda added that the rural demand in agriculture has been encouraging and the government's focus will aid the sector in helping farming to continue the momentum.