- 21 Nov 2022
- ICICIdirect Research
ESCORTS KUBOTA REVEALS MUCH AWAITED MID TERM BUSINESS PLAN
ESCORTS - 3438 Change: -13.25 (-0.38 %)News:
The company recently concluded its analyst meet wherein it disclosed its mid term business plan (MTBP) with new co-promoter i.e. Kubota. The key highlights of MTBP include (i) aspiration to grow revenues to >2.5x of FY22 levels (i.e. ~Rs 22,500+ crore in FY28E, implied CAGR of 16.5%+); (ii) increase share of exports from ~6.4% in FY22 to ~15-20% in FY28E; (iii) target EBITDA margins to mid-teens; (iv) RoCE at 25-30% and RoE>18%
View:
We came away impressed with the cultural shift, which EKL is seeing imbibing the best practices at Kubota and leverage opportunities that it sees to cross-sell across each other's network as well as development of EKL as one of the sourcing hubs for Kubota. It also shared a prudent capital allocation strategy wherein majority of cash would be used for growth capex with return of the same to shareholders (dividend+ buyback)
Impact:
Positive