Escorts Kubota wrapped up FY26 with the strongest financial performance in its history, yet the company's management was equally candid, on its post-results call, that the road ahead would be considerably narrower. Where the overall domestic volumes crossed 11.6 lakh units in FY26, the highest the market has ever recorded, the industry grew 23.4 percent over the previous year.

Escorts Kubota, amongst most other players, was a direct beneficiary. The Faridabad-based manufacturer shipped 1,33,670 tractors in FY26, its highest volume ever, up 14.9 percent year-on-year. Growth in its core northern and central markets, however, came in at around 17 percent while southern and western regions expanded at nearly 30 percent, lifted partly by state subsidy programmes. Management cited this regional imbalance, along with constrained availability of newly launched models during peak months, as the reasons volumes grew below the industry pace.

Nonetheless, revenue from continuing operations grew 12.6 percent to ₹11,472.8 crore, full-year EBITDA margin came in at 13.2 percent, 1.6 percentage points better than FY25, and net profit from continuing operations rose 24.4 percent to ₹1,380.9 crore. The fourth quarter contributed firmly, with revenue up 21.4 percent at ₹2,950.7 crore and EBITDA margin at 13.1 percent. The board recommended a total dividend of ₹51 per share for the year.

For FY27, the picture shifts. Management guided for a broadly flat tractor industry, plus or minus two to three percent, with the first half expected to see some growth against last year's slow start. The second half is likely to be harder. The comparison base of 11.6 lakh units is the highest the industry has ever produced, the GST tailwind has now normalised into baseline pricing, and El Niño conditions are a live concern. NOAA's April 2026 assessment puts the probability of El Niño emerging between June and August 2026 at 61 to 70 percent, which historically compresses kharif output and, with a lag, rural purchasing sentiment. "H2 would probably be a substantial degrowth," the Chief Officer of the company, Neeraj Mehra, told analysts on the call.

The company's response is a product offensive. A paddy-special tractor, developed with Kubota's engineering team in Japan, recently filled a long-standing gap in southern markets where Escorts Kubota has historically struggled to win ground. "The bleed in terms of market share has started to drop," Mehra said of those markets, with gradual share gains already showing. Multiple launches across all three brands, Farmtrac, Powertrac and Kubota, are planned over the next three to four months, and product development investment for FY27 is set at over ₹250 crore. The non-tractor agri business, covering farm implements and mechanisation equipment, is separately targeted to grow at around 20 percent annually over the next three years.

Margins, Costs and where the Capital Goes

Q4 agri segment margin was weaker than the full-year trend, weighed down by an adverse product mix and new product launch costs, and raw material pressure is still building. CFO Bharat Madan estimated that commodity inflation across steel, tyres and base metals could add up to five to six percent of revenue in costs. A 1.5 percent price hike across brands in April only partially offsets this. Labour costs add a structural layer; Haryana has raised contract wages by roughly 35 percent while vendor-concentrated Uttar Pradesh has seen increases of 22 to 23 percent, levels Madan said are unlikely to reverse. "Our effort will be to maintain the margin on a flattish basis," he said.

Capital commitments for the year are considerable. Regular capex is guided at ₹350 to ₹400 crore, primarily for product development. A greenfield plant will absorb around ₹500 crore in FY27 as initial work begins, against a total planned outlay of over ₹5,000 crore over the coming decade for both tractor and construction equipment capacity. The captive finance unit, seeded with ₹200 crore in FY26, will receive a further ₹500 crore over the next year to support retail conversion in a market where 70 percent of tractor purchases are financed.

Construction equipment had a difficult full year, with volumes down 10.6 percent and capacity utilisation at 47 percent as the segment worked through a normalisation after FY25's pre-buying surge. The final quarter improved, with CE revenue up 22.6 percent year-on-year to ₹556.5 crore and EBITDA margin at 12.7 percent. Crane market share rose 7.8 percentage points in Q4 to 43.7 percent. Division head Sanjeev Bajaj expects raw material cost pass-through to test near-term demand before conditions improve in H2, with a medium-term recovery anchored in the government infrastructure pipeline. CE export revenue, at five to six percent of divisional sales today, is targeted to reach 10 percent by FY30.