Escorts Kubota (ESCORTS)
CyclicalFairStock Score: 79/100 — STEADY
Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1
Key Financials
| Current Price | ₹3,113.7 |
| Market Cap | ₹34,259.23 Cr |
| P/E Ratio | 24.75 |
| ROCE | 13.59% |
| ROE | 23.07% |
| Dividend Yield | 1.06% |
| Profit Growth | -72.34% |
| Debt/Equity | 0.01 |
| Sales Growth | 20.46% |
| Free Cash Flow | ₹809 Cr |
| Promoter Holding | 68.04% |
| 52-Week Range | ₹2,701 — ₹3,987.8 |
| Sector | Agricultural, Commercial & Construction Vehicles |
| Book Value | ₹1,105.92 |
Strengths
- Pristine balance sheet: Debt/Equity 0.01, Altman Z-Score 3.77, Piotroski F-Score 8/9.
- Strong profitability: ROE 23.07%, ROCE 13.59%, and latest quarterly net margin of about 10.9%.
- High promoter holding of 68.04% aligns management with minority shareholders.
- Positive free cash flow of ₹809 Cr provides a cushion and supports the 0.80% dividend yield.
Concerns
- Valuation is demanding: P/E of 30.22 and P/B of 3.57 leave little room for error.
- Price of ₹3,309 is well above Graham Number of ₹1,994.85, implying a negative margin of safety by Graham standards.
- Profit growth of 96.63% looks cyclical/low-base driven; 5-year revenue CAGR is only 7.87%.
- Negative EV/EBITDA of -37.87 is an unexplained red flag that needs deeper examination.
AI Analysis
At first glance, Escorts Kubota is a quality business, but not a cheap one. The balance sheet is pristine: debt/equity of 0.01, Altman Z-score of 3.77, and a Piotroski F-score of 8 out of 9. That is the kind of financial health Graham would demand. Return on equity of 23.07% and ROCE of 13.59% tell me management uses retained earnings well. Promoter holding of 68.04% also aligns ownership with minority shareholders. But I have to be honest: this is a cyclical tractor company wearing a growth label. Five-year revenue CAGR is only 7.87%, and latest quarterly sales of ₹3,280 Cr produced ₹358 Cr net profit. The 96.63% profit growth sounds spectacular, but my experience says such jumps often come from a low base after an industry trough. At ₹3,309, the stock trades at 30.22 times earnings and 3.57 times book. The Graham Number—a conservative floor I respect—is only ₹1,994.85. That means I am paying a large premium above what my value screens call reasonable. The DCF figure of ₹3,872.79 gives some headroom, but DCF is only as good as its assumptions, and tractor demand is tied to monsoon and rural sentiment. I also note the negative EV/EBITDA ratio of -37.87; that is an oddity I would want explained before acting. Free cash flow of ₹809 Cr is a genuine plus, and a dividend yield of 0.80% is modest. So, would I buy? Not at this price. I admire the franchise and the clean books, but I want a margin of safety. Today, the margin is missing.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer