Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Escorts: Saviour other income - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 26, 2001

    Escorts: Saviour other income

    Escorts Ltd has reported a 62.6% YoY drop in its 1QFY02 net profit to Rs 332 m. The company would have reported a loss of Rs 95 m had it not been for extraordinary gains of Rs 523 m from profit on sale of its balance equity stake of 26% in Escorts Yamaha.

    (Rs m) 1QFY01 1QFY02 Change
    Sales 2,689 2,500 -7.0%
    Other Income 37 2 -94.5%
    Expenditure 2,396 2,338 -2.4%
    Operating Profit (EBDIT) 293 162 -44.7%
    Operating Profit Margin (%) 10.9% 6.5%  
    Interest 132 153 15.9%
    Depreciation 90 106 18.1%
    Profit before Tax 108 -95 -188.4%
    Extraordinary items 1,051 523 -50.3%
    Tax 270 95 -64.8%
    Profit after Tax/(Loss) 889 332 -62.6%
    Net profit margin (%) 33.1% 13.3%  
    No. of Shares (eoy) (m) 72.2 72.2  
    Diluted number of shares 72.2 72.2  
    Diluted Earnings per share* 49.2 18.4  

    The company's sales growth declined by 7% YoY to Rs 2,500 m in 1QFY02, as a result of a slowdown in its main business of tractors. Tractors contribute to around 85% of the company's overall sales. The negative agricultural growth in FY01 coupled with high inventory levels continues to keep the tractor industry posting negative growth rates.

    Escorts has lost market share in the past year to Mahindra & Mahindra and some other new players. Escorts market share went down from 19.1% in FY00 to 17.8% in FY01 as a result of aggressive marketing by others.

    On the costs front, the company has managed to reduce its consumption of raw materials as sales were depressed in 1QFY02. Besides, staff costs also remained unchanged in this quarter as compared to the corresponding quarter of the previous year. Other expenses rose sharply by 78% from Rs 236 m in 1QFY01 to Rs 421 m in 1QFY02, resulting in only a 2.4% decline in overall expenses. The company's operating margins fell from 10.9% in 1QFY01 to 6.5% in 1QFY02, a decline of 440 basis points.

    Divestment of investments is a thrust area for the company currently as part of its restructuring exercise. It will exit from non-core activities and concentrate in future on only four areas: agriculture, telecom, information technology and healthcare.

    The company has now sold off its 50% stake in Escorts Yamaha as two wheelers is not its focus area. As a result its cash flows should improve and debt levels should go down.

    On the current price of Rs 56.6 it is trading at 3.8xFY01 EPS of Rs 14.9.



    Equitymaster requests your view! Post a comment on "Escorts: Saviour other income". Click here!


    More Views on News

    Tata Motors Ltd: Another Disappointing Quarter, Management fails to Perform! (Quarterly Results Update - Detailed)

    Aug 14, 2017

    Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.

    Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! (Quarterly Results Update - Detailed)

    Aug 2, 2017

    GST realted cost impacts Margins, Management expects good year ahead.

    Hero Motocorp Ltd: Riding on the Scooters Growth, Maintains Margins! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Good Recovery in the Scooters market, expects pick up in exports too.

    Bajaj Auto Limited: Recovery in Exports but Domestic Disappoints! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.

    Bajaj Auto Limited: Finishes the Year with Headwinds. Poised for a Recovery Ahead? (Quarterly Results Update - Detailed)

    Jul 6, 2017

    Ends the year on a Flat note. Expects good recovery in the exports market.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)


    • Track your investment in ESCORTS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Detailed Quarterly Results With Charts