Escorts Kubota operating cash flow falls to Rs 4.60 crore

Escorts Kubota Limited generated net operating cash flow of Rs 4.60 crore in the standalone half year ended September 30, 2026, down from Rs 500.31 crore a year earlier. The principal factor was a Rs 1,047.62 crore cash outflow for inventories, trade receivables, other financial assets and other assets, partly offset by Rs 553.90 crore from payables, liabilities and provisions.

Why did Escorts Kubota's operating cash flow decline?

Escorts Kubota's operating cash flow declined because working-capital movements reduced cash generated after those changes to Rs 156.73 crore in the half year ended September 30, 2026, from Rs 703.36 crore in the corresponding 2025 period. Net income tax paid then absorbed Rs 152.13 crore, leaving only Rs 4.60 crore of net cash generated from operating activities, compared with Rs 203.05 crore of tax payments and Rs 500.31 crore of operating cash a year earlier.

The comparison includes a material change in the prior period's profit base. Profit before tax from continuing and discontinued operations after exceptional items was Rs 837.85 crore in the 2026 half year, against Rs 2,128.03 crore in the 2025 half year. The earlier period included a Rs 1,247.95 crore gain on the sale of assets held for sale, including discontinued operations, whereas no such gain was reported in the latest period.

Before working-capital movements, operating profit was Rs 650.45 crore for the half year ended September 30, 2026, down Rs 91.90 crore from Rs 742.35 crore a year earlier. That pre-working-capital measure reflected Rs 131.93 crore of depreciation and amortisation, Rs 179.28 crore of interest income and a Rs 148.32 crore gain on fair valuation and sale of investments carried at fair value through profit or loss.

Which working-capital items used Escorts Kubota's cash?

Escorts Kubota's inventories were the largest working-capital use, consuming Rs 571.50 crore in the half year ended September 30, 2026, compared with Rs 66.98 crore in the preceding-year period. Trade receivables consumed a further Rs 286.23 crore, up from Rs 167.86 crore, while other assets used Rs 174.68 crore compared with Rs 92.40 crore a year earlier.

Other financial assets used Rs 15.21 crore, versus Rs 2.77 crore in the corresponding 2025 half year. Taken together, the four asset categories absorbed Rs 1,047.62 crore of cash in 2026, compared with Rs 330.01 crore a year earlier. The increase in the cash absorbed by those categories was therefore Rs 717.61 crore across the two half-year periods.

Trade payables provided the main offset, contributing Rs 520.59 crore of cash in the latest half year, compared with Rs 300.07 crore in the year-earlier period. Other financial liabilities added Rs 8.39 crore and other liabilities and provisions added Rs 24.92 crore, whereas these two lines together had used Rs 9.05 crore in the corresponding prior period.

The balance sheet shows the period-end position underlying these movements. Inventories stood at Rs 1,972.76 crore on September 30, 2026, versus Rs 1,401.26 crore on March 31, 2026. Trade receivables increased to Rs 1,499.76 crore from Rs 1,234.21 crore, while other current assets rose to Rs 530.77 crore from Rs 381.09 crore over the same six months.

How did working capital change across Escorts Kubota's balance sheet?

Escorts Kubota's current assets increased by Rs 1,541.79 crore to Rs 11,524.53 crore at September 30, 2026, from Rs 9,982.74 crore at March 31, 2026. Current investments increased by Rs 541.13 crore to Rs 6,648.44 crore, and cash and cash equivalents rose by Rs 8.94 crore to Rs 175.04 crore, alongside the increases in inventories and receivables.

Current liabilities also increased, but by less than current assets. They reached Rs 3,569.54 crore on September 30, 2026, compared with Rs 3,033.19 crore on March 31, 2026. Trade payables owed to creditors other than micro and small enterprises rose to Rs 2,572.80 crore from Rs 2,079.10 crore, broadly consistent with the Rs 520.59 crore cash contribution from trade payables in the cash-flow statement.

The cash-flow outcome occurred despite higher continuing-operations revenue. Revenue from operations for the half year ended September 30, 2026 was Rs 6,410.27 crore, up from Rs 5,260.78 crore a year earlier. Agri machinery products contributed Rs 5,456.54 crore of half-year segment revenue, while construction equipment contributed Rs 955.83 crore, compared with Rs 4,614.34 crore and Rs 639.58 crore respectively in the previous-year period.

What were Escorts Kubota's other cash movements?

Escorts Kubota generated Rs 395.19 crore from investing activities in the half year ended September 30, 2026, compared with an outflow of Rs 347.45 crore a year earlier. The latest period included Rs 1,026.20 crore from net sales of current investments and Rs 331.92 crore of interest received, partly offset by Rs 444.02 crore for net purchases of non-current investments and Rs 378.63 crore paid towards acquiring leasehold rights.

In the corresponding 2025 half year, investing cash flow included Rs 1,711.69 crore of proceeds from sale of assets held for sale, including discontinued operations, and Rs 1,808.72 crore of net purchases of current investments. The source also records that the railway equipment division was transferred to Sona BLW Precision Forgings Limited during the quarter ended June 30, 2025, following completion of conditions precedent under the business transfer agreement.

Financing cash flows included Rs 363.10 crore of dividends paid during the 2026 half year, compared with Rs 198.02 crore a year earlier. The board had recommended a Rs 33 final dividend per equity share for financial year 2025-26 on May 7, 2026; shareholders approved it on July 15, 2026, and Escorts Kubota distributed it during the quarter ended September 30, 2026.

Cash and cash equivalents ended the latest half year at Rs 175.04 crore, up from Rs 166.10 crore at the beginning of the financial year. Escorts Kubota reported an Rs 8.94 crore increase in cash and cash equivalents across operating, investing and financing activities, whereas the corresponding 2025 half year recorded a Rs 66.29 crore decrease to Rs 270.77 crore.

Conclusion

Escorts Kubota's Rs 4.60 crore operating cash inflow represents a substantial reduction from Rs 500.31 crore a year earlier, driven by larger cash absorption in inventories, trade receivables and other assets. Higher payables partly moderated that effect, while the year-on-year comparison also reflects the absence of the prior period's gain from assets held for sale and discontinued operations.

The next point to watch is whether the September 30, 2026 balances of Rs 1,972.76 crore in inventories and Rs 1,499.76 crore in trade receivables change alongside the Rs 2,572.80 crore balance of trade payables owed to creditors other than micro and small enterprises. Those working-capital positions were the central unresolved drivers of the half-year cash-flow outcome.