Indian tractor maker Escorts Kubota posts slowest profit growth in five quarters as demand lags

BENGALURU (Reuters) - India's Escorts Kubota reported its slowest profit growth in five quarters on Thursday, hurt by weak rural demand for its tractors.

The company's standalone net profit rose 2.4% to 2.9 billion rupees ($34.6 million) in the three months to June 30.

Its revenue fell 1.5% to 22.93 billion rupees, the company said.

KEY CONTEXT

Escorts Kubota reported a 3.2% decline in wholesale tractor numbers during the quarter, which the company attributed to consumers delaying retail tractor purchases due to heatwaves and India's general elections.

Rival Mahindra and Mahindra's tractor sales, however, rose 5.6% in the quarter, and it reported a bigger adjusted quarterly profit.

Analysts expect demand for tractors to improve in the coming months as rainfall improves.

The country received 9% more rainfall in July, helping the rural population as without irrigation, nearly half of the farmland depends on annual monsoon rains.

PEER COMPARISON

Valuation Estimates (next 12 Analysts' sentiment

(next 12 months)

months)

RIC PE EV/EBI Revenue Profit Mean # of Stock to Div

TDA growth growth rating* analyst price yield

s target** (%)

Escorts Kubota 36.18 30.17 10.88 14.75 Hold 7 1.23 0.43

Mahindra and 28.00 26.50 13.25 13.12 Buy 32 0.96 0.72

Mahindra

Eicher Motors 29.16 26.55 11.53 12.57 Hold 25 1.08 1.03

Tata Motors 16.53 6.88 7.96 -10.95 Buy 29 1.06 0.26

* Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell

** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT

APRIL-JUNE STOCK PERFORMANCE

-- All data from LSEG

-- $1 = 83.7110 Indian rupees

(Reporting by Varun Hebbalalu in Bengaluru; Editing by Sonia Cheema)