Midcap Auto Stock Rallied 4.45%, Trading 12.76% Away From 52-Week High, "Buy" Says Emkay Global

Brokerage firm Emkay Global has assigned a "Buy" on the stock of Escorts Kubota Ltd, a midcap Auto & Auto Ancillary sector stock. The brokerage has estimated a target price of Rs 2,500 apiece on the stock of the company. If you buy the stock at the current market price, it can fetch a potential upside of up to 22%. The company is one of India's leading engineering conglomerates operating in the Auto and Auto Ancillary sector. It has a market capitalisation of Rs 27,150.74 crore.

Escorts Kubota Ltd- Stock Outlook & Performance

The stock of Escorts Kubota Ltd on Friday, 10 February 2023 rallied 4.45% and closed at Rs 2,057.80 apiece. The stock is trading 12.76% away from its 52 week high of Rs 2,358.35 apiece recorded on 1 December 2022. The stock recorded its 52 week low on 30 June 2022 at Rs 1,306.70 apiece.

The stock in a week has fallen 0.93% and in 1 month 5.49%, respectively. In the past 1 year, it has gained 11.43%. In the past 3 years, it gained 136.39% positive return. The stock has gained 125.96% positive return.

 

Emkay Global Suggest "Buy" the stock with a Target Price of Rs 2,500/share

Emkay Global has said, "Q3 EBITDA declined by 28% YoY to Rs1.9bn, 10% below our estimates, due to lower gross margin. Management expects margins to normalize over the next few quarters, owing to better net pricing, commodity deflation, and cost savings. Revenue grew by 16% to Rs22.6bn, broadly in-line with our estimates. Factoring in the lower-margin assumptions, we have reduced our FY23-25E EPS by 1-4%. Following the revision, we expect robust revenue/EPS CAGRs of 26%/41% over FY23-25E."

It added, "Escorts remains one of our top sector picks, underpinned by robust medium-term prospects, backed by: 1) enhanced market presence in the domestic agri machinery market, with expansion of the product portfolio, especially in wet-land tractors and farm implements; 2) improved market positioning in construction equipment (CE) on widening of the product portfolio; 3) increased exports by leveraging Kubota's global distribution network; and 4) commencement of component exports to meet Kubota's global requirements.

It further added, "We reaffirm BUY with a TP of Rs2,500/share (Rs2,430 earlier), based on 25x FY25E core EPS (Dec-24E earlier) and cash at Rs352/share (0.80x book)."

 

Disclaimer

The stock has been picked from the brokerage report of Emkay Global. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.