Escorts Kubota shares jump 5%; Kotak upgrades on hopes of revival in market share

Shares of Escorts Kubota Ltd. gained as much as 4% in early trade on Tuesday, March 10, after brokerage firm Kotak Institutional Equities upgraded its rating on the stock, saying its core drivers remain intact.Kotak Institutional Equities now has a “add” rating on Escorts Kubota, compared to its previous “sell” recommendation and a price target of ₹3,375 per share, which indicates an upside of only 5.3% from its previous close.

Escorts Kubota’s tractor demand has become less dependent on monsoon variability because of structural buffers including irrigation, MSP support, income diversification, non-agricultural usage and improved finances, Kotak Institutional Equities wrote in its note.
As per the brokerage’s state-wise analysis, the correlation between rainfall and tractor sales over the past decade is 0.4, which it said can be described as “weak to moderate.”It said that while monsoon is a determinant of tractor sales, there are various other factors that impact sales. For example, in 2009, despite a 23% deficient monsoon, tractor sales increased by 32% from the previous year’s volume growth, mainly on account of higher MSPs, steady rabi crop production, alternate sources of rural income and a focus on credit disbursements to the agriculture sector, the analyst said.

With the GST cut and improvement in terms of trade, Kotak believes the decline in tractor volumes will be limited.

The brokerage said it has fine-tuned its EBITDA estimates for financial year 2026-2028, adding that the recent correction due to El Nino concerns and geopolitical tensions is overdone.

Farm fundaments remain intact and the analyst believes the tractor industry will report a 6% – 7% compounded annual growth rate (CAGR) over the medium term.Escorts Kubota’s recent launches aim to address product gaps and should drive market share gains. With newer launches in the tractor segment, the brokerage believes the market share has bottomed out and will start inching upward in the coming quarters. It said the construction equipment industry is well-poised for recovery from the ongoing calendar year.

Kotak said Escorts Kubota’s construction equipment segment is expected to recover from the calendar year 2026. Its diversification into spares, engines and agri-solutions should help broaden revenue base, it added.

Escorts Kubota’s tractor sales in February increased by 20.4% to 10,339 units from 8,590 units in the previous year.

Of the 19 analysts who have coverage on the stock, seven have a ‘buy’ rating and six each have ‘hold’ and ‘sell’ ratings.

Shares of Escorts Kubota are trading 4.7% higher at ₹3,354.4. The stock is down 13% in the last one month.

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