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    Research Insight

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    Escorts Ltd is a leading Indian tractor manufacturer with an 11% market share. It derives over 70% of its profits from tractor sales. The company benefited from strong monsoon rains and government schemes that increased farmer cash flows and tractor demand. However, sustained growth is uncertain. Escorts expanded its reach through a partnership with a foreign firm. It faces competition from TAFE, Mahindra, and Ashok Leyland in the Indian tractor market. Escorts is well positioned due to the oligopolistic nature of the industry and importance of agriculture to the Indian economy.

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    Research Insight

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    Escorts Ltd is a leading Indian tractor manufacturer with an 11% market share. It derives over 70% of its profits from tractor sales. The company benefited from strong monsoon rains and government schemes that increased farmer cash flows and tractor demand. However, sustained growth is uncertain. Escorts expanded its reach through a partnership with a foreign firm. It faces competition from TAFE, Mahindra, and Ashok Leyland in the Indian tractor market. Escorts is well positioned due to the oligopolistic nature of the industry and importance of agriculture to the Indian economy.

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    Escorts Ltd is a leading Indian tractor manufacturer with an 11% market share. It derives over 70% of its profits from tractor sales. The company benefited from strong monsoon rains and government schemes that increased farmer cash flows and tractor demand. However, sustained growth is uncertain. Escorts expanded its reach through a partnership with a foreign firm. It faces competition from TAFE, Mahindra, and Ashok Leyland in the Indian tractor market. Escorts is well positioned due to the oligopolistic nature of the industry and importance of agriculture to the Indian economy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    18 views4 pages

    Research Insight

    Uploaded by

    scooby doo
    Escorts Ltd is a leading Indian tractor manufacturer with an 11% market share. It derives over 70% of its profits from tractor sales. The company benefited from strong monsoon rains and government schemes that increased farmer cash flows and tractor demand. However, sustained growth is uncertain. Escorts expanded its reach through a partnership with a foreign firm. It faces competition from TAFE, Mahindra, and Ashok Leyland in the Indian tractor market. Escorts is well positioned due to the oligopolistic nature of the industry and importance of agriculture to the Indian economy.

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    of 4

    Company: Escorts Ltd

    General Overview

    Escorts is a leading player in the farm machine sector. It has around 11% share of the
    Indian tractor market. Around 70%+ profit for the company comes through the tractors.
    It also has construction equipment and railway business. The monsoons in India has
    been a huge reward despite corona. The perfect weather had generated plenty of cash
    flow to the farmers and many of them have purchases tractors from him owing to the
    huge cash flows that they received from the crops. However, it is not sure if the growth
    that was seen is sustainable. There is a prospect for growth in this sector owing to the
    schemes announced by the hon' finance minister of India. The sector has been seeing
    double digits in nest growth lately. Escorts volume has been increasing. They have
    recently partnered with a foreign firm to expand its reach to outside what we see.
    Escorts Limited manufactures and sells Agri machinery, construction equipment, and
    railway equipment in India and internationally. Escorts Limited was founded in 1944 and
    is based in Faridabad, India.

    Shareholding Pattern

    It is a private sector company. The majority of the company is held by Escorts Benefit
    and Welfare Trust. The biggest individual investor is Rakesh Jhunjhunwala. The top 10
    shareholders of the company are:

    S.no Company Percentage

    1. Escorts Benefit and Welfare Trust 25.58%

    2. Kubota Corporation 9.3%

    3. Har Parshad Company Private Limited 8.14%

    4. Rakesh Jhunjhunwala 4.86%

    5. BlackRock, Inc. 2.65%

    6. Escorts Employees Stock Option Scheme 2.33%

    7. T. Rowe Price Group, Inc. 2.1%

    8. UTI Asset Management Company Limited 1.86%

    9. The Vanguard Group, Inc. 1.47%


    10. Big Apple Clothing Pvt. Ltd. 1.34%

    Escorts had significant insider trading that happened this year. The majority of the
    trades were sell orders that may signify that the insiders have lost faith in the company.

    Management of the company

    Name Designation

    Nikhil Nanda Chairman & MD

    Bharat Madan Group CFO & Corporate Head

    Satyendra Chauhan Chief GM of Legal & Secretarial

    Nitasha Nanda Head of Group Investment Companies &


    Whole-Time Director

    Shailendra Agrawal Executive & Non-Independent Director

    Mr. Nikhil Nanda has been the Managing Director of Escorts Limited since September
    2013 and its Chairman since August 7, 2018. He is an alumnus of Wharton Business
    School, Philadelphia. Having graduated in Business Administration in 1995, he majored
    in Management and Marketing, before undergoing professional training with JC
    Bamford Excavators Ltd., U.K.

    Mr. Bharat Madan, B.Com (Hons.), FCA serves as the Group Chief Financial Officer at
    Escorts Limited and has been its Corporate Head since February 2019. Mr. Madan is a
    1988 batch Fellow Chartered Accountant. He is a member of All India Management
    Association (AIMA) and IMA-CFO Forum, with rich experience in financial management.

    Mr. Satyendra Chauhan serves as Company Secretary at Escorts Limited since January
    29, 2020. He is an associate member of the Institute of Company Secretaries of India
    {ICSI) and a Law graduate. He serves on the Board of the Escorts Consumer Credit
    Limited and EEWL Limited.

    SWOT Analysis Escorts Ltd.

    Strength:
    ● Stock passes the majority of CANSLIM Investment criteria
    ● Rising Net Cash Flow and Cash from Operating activity Company with high TTM
    EPS Growth
    ● Good quarterly growth in the recent results
    ● Growth in Net Profit with increasing Profit Margin (QoQ)
    ● Company with Low Debt Increasing Revenue every quarter for the past 2
    quarters
    ● Increasing profits every quarter for the past 2 quarters
    ● Book Value per share improving for the last 2 years

    Weakness
    ● Companies with growing costs YoY for long term projects
    ● MFs decreased their shareholding last quarter

    Opportunities
    ● Brokers upgraded recommendation or target price in the past three months
    ● Positive Breakout Second Resistance ( LTP > R2)
    ● Highest Recovery from 52 Week Low RSI indicating price strength High Volume,
    High Gain

    Threat
    ● Rising political unrest due to farmer issues

    Competitor Analysis

    The Indian market has numerous competitors in the tractor field with India being
    primarily an agricultural economy. The main competitors for Escorts are TAFE (tractors
    and farm equipment ltd), Ashok Leyland, and Mahindra.

    Tractors and Farm Equipment Ltd


    It is the third-largest tractor manufacturer in the world and second-largest in India. It was
    founded in 1960 and is headquartered in Chennai. The CEO is Mallika Srinivasan who
    is a graduate of Wharton. She has been the CEO for the past 9 years. It is not a listed
    company.

    Ashok Leyland
    Headquartered in Chennai, they do not need exactly fit in the product portfolio offered
    by Escorts as they mainly dwell in the commercial vehicles space. However, they are of
    use in the farming field and they can easily include tractors in the portfolio given the
    amount of trust they enjoy in the market. It is owned by Hinduja group. It was founded in
    1948. It is a listed company. It has a market capitalization of Rs 398.64 billion.
    Mahindra

    Mahindra is the world’s highest-selling tractor brand by volume. Rajesh Jejurikar is the
    executive director for the farming division at Mahindra and Mahindra and hence in
    charge of the tractor segment. He is a graduate of SP Jain Management Institute in
    Mumbai. Mahindra and Mahindra the parent company is listed in the stock market.

    Conclusion and Way forward

    Escorts is in a good position as it is in a market with few players. As agriculture is an


    industry that would stay for ages to come the company would never have a lack of
    clients. They can continue investing in R & D to simplify the process for everyone.

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