Escorts Kubota Q1 FY27: Record Volumes, Margin Headwinds

Standalone revenue from operations for Q1 FY27 was INR 3,178.9 crore, up 28.0% year on year and up 7.7% quarter on quarter.

Total tractor volumes were 36,862 units, up 20.5% year on year. Domestic tractor sales were 35,457 units, up 22.9% versus industry domestic growth of 18.6%.

Management attributed margin pressure to commodity cost inflation and logistics and imported component cost increases linked to geopolitical disruption and shipping issues.

Standalone Construction Equipment revenue was INR 419.6 crore, up 39.2% year on year. Segment EBIT margin was 5.4% in Q1 FY27.

Management guided that FY27 tractor export volumes are expected to be broadly flat for the full year despite a weak Q1, and FY28 is expected to see good growth with potential North America market opening.

Management indicated FY27 capex of about INR 450 crore to INR 500 crore for greenfield land acquisition, and stated the land has been allotted and payment made, with development work starting.

Management stated captive finance penetration was about 10% to 12% in Q1 and 15% plus in July where active, and guided to cover about 40% to 50% dealerships by FY27 and expand pan India by FY28.