Tractor Demand Resilient: Escorts Kubota Sees 5% Share Increase

Escorts Kubota Shares Rise After Kotak Institutional Equities Upgrades Stock to “Buy”​

Stock Gains Up to 4% in Early Trade​

Shares of Escorts Kubota Ltd. moved higher in early trading on Tuesday, March 10, rising as much as 4% after Kotak Institutional Equities upgraded the stock and highlighted that the company’s core growth drivers remain intact.

The brokerage upgraded its recommendation to “buy” from its earlier “sell” rating and set a price target of ₹3,375 per share. The target implies a potential upside of about 5.3% from the previous closing price.

Tractor Demand Less Dependent on Monsoon​

Kotak Institutional Equities said tractor demand in India has become less dependent on monsoon variability due to several structural factors. These include wider irrigation coverage, minimum support price support, diversification of rural income sources, non agricultural tractor usage, and improved farmer finances.

The brokerage’s state wise analysis shows that the correlation between rainfall and tractor sales over the past decade stands at 0.4, which it described as weak to moderate. While monsoon conditions still influence demand, other factors increasingly play a role in supporting tractor sales.

Historical Example Shows Limited Monsoon Impact​

The brokerage pointed to the 2009 agricultural season as an example of this trend. Despite a 23% deficient monsoon, tractor sales grew 32% from the previous year’s volume growth.

This increase was supported by higher minimum support prices, stable rabi crop production, alternate rural income sources, and stronger credit disbursement to the agriculture sector.

Volume Outlook Supported by GST Cut and Farm Economics​

Kotak Institutional Equities believes that recent GST cuts and improved terms of trade for farmers could limit the decline in tractor volumes.

The brokerage has also fine tuned its EBITDA estimates for financial years 2026 to 2028, stating that the recent stock correction triggered by El Nino concerns and geopolitical tensions appears overdone.

According to the brokerage, farm fundamentals remain intact, and the tractor industry could deliver 6% to 7% compound annual growth over the medium term.

New Product Launches May Support Market Share​

Escorts Kubota’s recent tractor launches are expected to address product gaps and help the company gain market share.

Kotak Institutional Equities believes that the company’s market share has likely bottomed out and could gradually improve in the coming quarters as the new products gain traction.

Construction Equipment Business Seen Recovering​

The brokerage also highlighted the outlook for Escorts Kubota’s construction equipment segment, which it expects to recover starting in calendar year 2026.

In addition, the company’s diversification into spares, engines, and agri solutions is expected to help broaden its revenue base over time.

Strong Tractor Sales Growth in February​

Escorts Kubota reported tractor sales of 10,339 units in February, marking a 20.4% increase compared with 8,590 units in the same period last year.

Analyst Coverage and Stock Performance​

Among the 19 analysts covering the stock, seven have a buy rating, while six analysts each have hold and sell recommendations.

Shares of Escorts Kubota were trading 4.7% higher at ₹3,354.4 during the session. Despite the recent rally, the stock remains down about 13% over the past month.