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Escorts will get rankings improve from CRISIL

CRISIL Ratings has upgraded its ratings for long-term escorts banking facilities from “CRISIL AA-” to “CRISIL AA” and changed the outlook from “Positive” to “Stable”.

The rating for the short-term bank facilities and commercial paper program was confirmed at ‘CRISIL A1 +’.

According to CRISIL, the rating measure follows an improvement in the business risk profile due to a healthy market share in tractors and a higher than expected demand for tractors in the domestic market, which will result in sales growth of 16-17% (higher than expected 9-10%) for the tractor division of Escorts (77% of sales in fiscal 2020) in fiscal 2021.

The Construction Equipment (CE) business area (15% of sales) is expected to see sales growth in the second half of the 2021 financial year and halt the general decline of 20-25%. For the railway equipment segment (8% of sales), sales are expected to remain stable due to the slow execution of existing orders and subdued incoming orders.

The business risk profile will remain healthy with an 11-12% market share in tractors, an improvement in the performance of the CE segment and a good outlook for the railway equipment segment. In the medium term, sales growth of 8 to 10% is expected with steady growth in all business areas. The operating margin is expected to be 12-14% and the annual provision is expected to be 750-800 rupees.

CRISIL Ratings assumes that Escorts will continue to benefit from the improving market position in the agricultural machinery segment and the performance of the CE segment in the medium term, while maintaining the strong financial risk profile and robust liquidity.

The Escorts Group is an Indian engineering company that operates in the fields of agricultural machinery, construction and material handling equipment and railway equipment.

The company’s consolidated net income rose 85.1% to Rs.286.71 billion after operating revenue increased 23.8% to $ 2,042.23 billion for the third quarter of FY 21 versus the third quarter of FY 20. Rupees had risen.

The scrip fell 2.10% to Rs 1349.60. It has traded in the 1348-1378.60 range during the day.

Over the past three months, the stock is down 3.97%, while the benchmark Sensex is up 17.39% over the same period.

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(This story was not edited by Business Standard staff and is automatically generated from a syndicated feed.)

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