Escorts Kubota Q2 profit surges 54% aided by sharp decline in tax expense

Escorts Kubota Ltd reported a 54% increase in consolidated profit after tax at ₹324.2 crore in the second quarter of FY25, up from ₹210.5 crore in the same quarter last year due to a sharp fall in tax expenses. Tax expenses were lower by nearly ₹97 crore in the second quarter compared to same period last year.

The company’s consolidated revenue grew by a modest 0.4% year-on-year to ₹2,488.5 crore. Consolidated EBITDA remained stable at ₹264.7 crore with a margin of 10.6%.

On a standalone basis, the farm equipment and construction machinery manufacturer recorded revenue from operations of ₹2,476.2 crore, up 0.5% from the previous year, while standalone profit after tax increased by 53.2% to ₹326.7 crore. The company's standalone EBITDA stood at ₹267.6 crore, maintaining margins at 10.8%.

In terms of operational performance, the company faced mixed results across segments. Tractor sales saw a marginal decline of 0.9% to 25,995 units, while construction equipment volumes decreased by 18.4% to 1,394 units. The railway equipment division revenue dropped by 9.9% to ₹211.2 crore.

A significant development during the quarter was the announcement of a Business Transfer Agreement with Sona BLW Precision Forgings Limited (Sona Comstar) on October 23, 2024. Under this agreement, EKL will sell its Railway Equipment Division for ₹1,600 crore, subject to necessary approvals and customary closing conditions.

The company's segment-wise performance showed Agri Machinery Products maintaining its position as the largest revenue contributor at 73% of total revenue. The Construction Equipment segment demonstrated resilience with an EBIT margin of 9.3%, while the Railway Equipment division recorded an EBIT margin of 15.2%.

Operationally, the company maintained strong efficiency levels with tractor capacity utilization at approximately 73% and construction equipment at 68%. The railway equipment division continued to hold a robust order book of over ₹1,100 crore as of September 30, 2024, demonstrating sustained market demand despite the planned divestment.

H1FY25 Figures

The company’s H1 consolidated revenue remaining flat at ₹5,306.9 crore compared to the previous year. The company's H1 consolidated profit after tax showed strong growth of 23.2%, reaching ₹625.9 crore. For the half year, consolidated EBITDA improved marginally by 0.6% to ₹632.4 crore, maintaining a healthy margin of 11.9%.

On a standalone basis, H1 revenue showed a slight increase of 0.2% to ₹5,277.1 crore, while H1 standalone profit after tax rose significantly by 23.9% to ₹630.2 crore.

Operational performance for H1 FY25 showed some challenges, with total tractor sales declining by 3.6% to 56,365 units and construction equipment volumes dropping by 12.6% to 2,776 units. The railway equipment division saw a 14.3% decrease in revenue to ₹455.9 crore for the half year.

The company's segment-wise performance for H1 showed Agri Machinery Products maintaining strong momentum with revenue growth of 3.7% to ₹4,055.9 crore. The Construction Equipment segment faced some headwinds with H1 revenue declining by 6.9% to ₹760.6 crore, though maintaining healthy profitability with a positive EBIT margin.

The company's market position remained strong in key segments, with domestic tractor market share at 11.5% for H1 FY25. In the construction equipment segment, the company maintained leadership in the Pick and Carry crane segment with a 39.7% market share during the first half of the fiscal year