Escorts Stock Increased 46%, Sharekhan Expecting A 15% More Surge After Kubota's Stake hike

Brokerage firm Sharekhan in a recent report mentioned that tractor-maker Escorts' share price is anticipated to jump 15%. Escorts' share price has already increased by more than 46% in the last 3 months. Earlier in the last week, the company's stocks hit a 52-weeks high level, as the company's board approved fund-raising via preferential issue.

Kubota Corporation of Japan is going to have a stake hike in Escorts. The corporation will surge their stake to 14.99%, with Rs. 1,872 crore. Kubota Corporation is the largest tractor producer, globally. So, this is encouraging investors and analysts to be more positive about Escorts' share prices and company growth in the upcoming financial year (FY). Kubota will become a joint promoter of the enterprise along with the business family.

The share price of Escorts

Each share price of Escorts stood at Rs. 1770.25, till November 22, 2.00 PM IST. On November 18, Escorts' share price jumped to Rs. 1802 per share, while on August 18 the company's share price was at Rs. 1229.9 per share. From May to July, Escorts' stocks did not perform well in the NSE, but they roared back with an extensive business plan.

Sharekhan in its report said, "We believe the proposed deal to be positive for Escorts and provide an opportunity to improve on its technologies, widen product portfolio, increase revenue streams and enhance geographical presence. The stock trades at a P/E multiple of 18.6x and EV/EBITDA of 16.5x on FY23E earnings."

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Further progress

However, the name of the company will be changed to Escorts Kubota Limited from Escorts Ltd., and they will intend to take a lead in the global farm-equipment sector.

Kubota will additionally offer Escorts' shareholders to acquire up to 26% of the company's share capital. According to reports, the open offer will be available at the same price as the preferential issuance of Rs. 2,000 a share, and Kubota's stake in Escorts will increase to 44.80% after the open offer.