Escorts Limited: Value Pick Stock July 2020
Escorts Limited – one of India’s prominent engineering companies, is the best of choice for farming and construction equipment in the country.
Escorts Limited: History
Escorts Limited was incorporated in the year 1944 as Escorts Agents Limited in Lahore.
The Company has been among the leading players in the tractor industry and well-known brand in the farm equipment space since independence.
During the last two decades, it has forged one of the most extraordinary turnaround stories in the history of the domestic automobile industry through focused and rigorous efforts.
Escorts Limited: Business
The company has diversified business mainly in 3 different segments –
Agri Machinery:
- Pioneer of farm modernization in India, Escorts’ Agri Machinery has in the last 7 decades, committed itself to enhance India’s agricultural productivity and add value to the farmer’s life.
- Escorts currently provide a technologically superior range of 22 HP to 80 HP tractors with under two star brands; (1) Farmtrac and (2) Powertrac.
- With a network of more than 800 customer touch-points, Escorts Agri Machinery ensures the satisfaction of its customer (base of over 14,00,000) and also promises maximum uptime of their tractors and equipment.
Material Handling & Construction Equipment:
- Infrastructure development in the country is a challenge transformed into opportunity, by Escorts at ECE. The Company is not merely nation-building; it is to create conditions for maximization of national economic strength, which carries deep into the growth graphs of the future.
- Today, Escorts provide equipment for material handling, road building, earthmoving, and other services, addressing the large national opportunity with a comprehensive basket of products. In doing so, it helps meet the growing requirements of the country’s infrastructure development, mining, realty, and other sectors.
- Escorts Limited is a primary material handling and construction equipment manufacturer – the company manufactures and markets a large range of equipment like cranes, forklifts, loaders, and vibratory rollers. The company today is the world’s largest Pick `n` Carry Hydraulic Mobile Crane manufacturer.
Railway Equipment
- Escorts’ ‘RED’ (Railway Equipment Division) possesses a rich, multi-decade experience in the Manufacturing of critical railway components.
- The division (started in the year 1962) is one of the oldest such units in the country, partnering the Indian Railways in its modernization journey. The division is a market leader across all its product offerings.
- RED develops cutting-edge technology products in a state-of-the-art research and design facility and through collaboration with leading technology providers. The division has specialized in the comfort, safety, and reliability niche.
Escorts Auto Products:
- Escorts’ auto products manufacture auto suspension products such as (1) shock absorbers, (2) struts, and (3) telescopic front forks for the automotive industry.
- The company collaborated with Fichtel & Sachs, Germany to introduce the concept of shock absorbers manufacturing in India in 1966.
- In the year 2016, Escorts’ Auto Products business was divested to Pune-based Badve Engineering.
Escorts: New Joint Ventures
- Escorts and Kubota signed a joint venture (JV) in February 2019 for manufacturing higher hp tractors, equipped with the latest technology. Escorts hold a 40 per cent stake in the JV.
- In March 2020, Escorts Ltd acquired Sumitomo Corporation’s 40 per cent stake in the Kubota-Sumitomo marketing JV for INR 90 Cr. This deal will help expand its export business by accessing Kubota’s international network.
- Further, to expand its offerings, Escort has formed a JV for distributing products of South Korean CE OEM Doosan Infracore, also the company has forged manufacturing JV with Japan’s leading crane manufacturer Tadano.
Escorts Limited: Distribution Network
Escorts currently have around 1,000 dealerships and service stations across the country. Around 60 per cent of these are present in its stronghold of north and central India.
Listed On:
The shares of Escorts Limited are presently listed at Bombay Stock Exchange (BSE); CODE 500495 and National Stock Exchange (NSE) as ESCORTS
Stock Info: Escorts Limited
Share Holding Pattern
Financials: Escorts Limited
Conclusion
Escorts Group – an Indian multinational conglomerate and automotive engineering company that operates in the sectors such as agri-machinery, construction and material handling equipment, and railway equipment.
The Escorts Group is among India’s Best Tractor Manufacturing Companies pioneers in manufacturing mobile cranes, tractors, railway equipment, construction equipment, etc.
Promoters of the company are having more than 40 per cent stake with Zero per cent pledge shares.
Along with this, some of the top institutions like ALTERNATIVE INVESTMENT FUND, Abu Dhabi Investment Authority (Behave), Tata Mutual Fund, T. Rowe Price International Discovery Fund, UTI – LONG TERM EQUITY FUND, SBI Life Insurance Co. Ltd, and RAKESH JHUNJHUNWALA is having more than 1 per cent stake in the company.
Given the solid traction in the rural economy on the back of a plentiful crop season previous year, supported by an increase in the MSP (minimum support price), the expectation of an overflowing monsoon this year and healthy reservoir levels, it seems that the next tractor upcycle has started which may last for another two years.
On the technical front, Escorts Limited is trading well above its 50 EMA (948) and 200 EMA (786) on the daily chart.a
Keeping the above-listed factors in mind, Escorts Limited looks good at INR 1050. Finblab recommends investing in the stock in a staggered manner for medium to long term.
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