Escorts share price fell 1 percent in the early trade on March 25 even as the company announced a price hike on its tractors.
Escorts Agri Machinery (EAM), division of Escorts Limited, shall be increasing the prices of its tractors effective 1st April 2021, as per the BSE Release.
There has been a steady rise in commodity prices necessitating a price hike to offset the impact of the inflation, it added.
The increase in prices would vary across models and variants.
“Escorts has reported ~ 17% volume growth in 11MFY21 on the back of positive macroeconomic factors and strong rural cash flows. The supply side situation is normal, but rising inflation continues to be a worry. Hence, the company is increasing the price of its tractors from 1st April 2021," said Amarjeet Maurya - AVP - Mid Caps, Angel Broking.
"There has been a steady rise in commodity prices necessitating a price hike to offset the impact of the inflation. The increase in prices vary from models and variants. Thus, overall this is a positive development for the company, which would support profitability going ahead," he added.
Broking firm Angel Broking has kept a buy call on the stock with a price target of Rs 1,573 per share.
Escorts is a prominent tractor player domestically with market share in excess of 11%. With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as better than expected Kharif crop in 2020, we expect the tractor industry will continue to outperform the larger automobile space in FY21, firm said.
The company has also reported a strong growth of 25.7% YoY in Q3FY21 which is expected to continue into the fourth quarter driven by strong demand, it added.
At 09:22 hrs Escorts was quoting at Rs 1,308.40, down Rs 14.25, or 1.08 percent on the BSE.
The share touched a 52-week high of Rs 1,468.40 and a 52-week low of Rs 559.45 on 09 February, 2021 and 03 April, 2020, respectively.
Currently, it is trading 10.9 percent below its 52-week high and 133.87 percent above its 52-week low.
The company`s product range includes Tractors i.e. Farmtrac, Powertrac, Escort, Engines, Implements & Trailors, Lubricants ECEL, Hydraulic Mobile Cranes, Compactors, Forklifts, Articulated Boom Cranes, Railway Equipment and Auto Component.