Escorts Kubota Q2 Net Profit Drops 21% to Rs 255 Crore as Raw Material Costs Rise

Escorts Kubota reported a 20.6 percent year-on-year decline in standalone net profit to Rs 255.04 crore for Q2 FY27, down from Rs 321.18 crore recorded in the corresponding period of the previous financial year.

On a sequential basis, standalone net profit fell 34.2 percent compared to Rs 387.34 crore reported in Q1 FY27. The decline in profitability came as operating expenditure outpaced top-line expansion, driven by elevated raw material prices and shift in product mix.

Standalone revenue from operations for Q2 FY27 increased 16.3 percent year-on-year to Rs 3,231.37 crore from Rs 2,777.42 crore in Q2 FY26, and grew 1.7 percent sequentially over Rs 3,178.90 crore in Q1 FY27.

Total standalone expenses rose 21.4 percent year-on-year to Rs 3,010.23 crore from Rs 2,479.90 crore, driven by a 21.4 percent increase in raw material costs to Rs 2,161.14 crore and a 274 percent surge in stock-in-trade purchases to Rs 574.36 crore. Sequential expenses expanded 4.1 percent from Rs 2,892.52 crore.

Standalone EBITDA contracted 19.5 percent year-on-year to Rs 292.40 crore, with EBITDA margins narrowing by 403 basis points to 9.0 percent.

On a consolidated basis, net profit from continuing operations fell 21.3 percent year-on-year to Rs 250.22 crore in Q2 FY27 from Rs 318.11 crore in Q2 FY26, and dropped 35.2 percent sequentially from Rs 385.93 crore.

Consolidated revenue from operations grew 16.2 percent year-on-year to Rs 3,243.41 crore against Rs 2,791.56 crore, while consolidated expenses rose 21.2 percent to Rs 3,028.11 crore from Rs 2,498.56 crore in the year-ago period.

Auditor's notes detailed that previous-year H1 comparison figures included a one-time gain of Rs 1,004.37 crore from the slump sale of the Railway Equipment Division to Sona BLW Precision Forgings Limited completed in Q1 FY26, rendering reported H1 FY27 net profit non-comparable year-on-year.

Segment-wise, Agri Machinery revenue grew 10.6 percent year-on-year to Rs 2,690.08 crore on tractor sales of 34,017 units, but EBIT margins dropped to 7.8 percent from 12.8 percent in Q2 FY26 due to commodity inflation.

Construction Equipment revenue expanded 58.6 percent year-on-year to Rs 536.20 crore with sales of 1,764 units, while EBIT margins improved 411 basis points to 7.9 percent on operating leverage.

"Profitability during the quarter was impacted by elevated commodity costs and changes in product mix. While cost pressures remained higher than anticipated, we continue to focus on operational efficiencies and cost optimization initiatives across the business. Assuming a stable commodity environment from Q4 onwards, we expect margins to improve gradually from Q4 and return closer to normal levels in FY28," management said in a statement.