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On Monday, BofA Securities analyst Gunjan Prithyani upgraded Escorts (NSE:ESCO) Kubota Ltd (ESCORTS:IN) stock rating from Underperform to Buy, with a new price target set at INR3,500, up from the previous INR2,725. The revision reflects a positive outlook for the tractor industry, which is expected to see high single-digit growth in fiscal year 2026.
Prithyani’s analysis suggests that the integration of the Kubota brand and the adoption of streamlined processes in the ’Japanese way’ are now largely complete under the Kubota parentage. The completion of this phase is seen as a precursor to the company working towards its mid-term strategic targets.
The report also highlights India’s prominent role in Kubota Japan’s recent briefings, emphasizing market share gains, exports, and parts sourcing as key focus areas. This strategic importance is expected to contribute to the growth prospects of Escorts Kubota.
Despite acknowledging that the current valuations are not inexpensive, with the stock trading at 28 times and 25 times the fiscal years 2026 and 2027 earnings, respectively, Prithyani notes that the near-term earnings may not fully reflect the potential for margin improvement and opportunities in exports and supply chain enhancements.
The analyst also pointed out that approximately 20% of the company’s market capitalization is represented by cash on the books, indicating a strong balance sheet position for Escorts Kubota.
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