Escorts hosted a conference call on Aug 1, 2022. In the conference call, the company was represented by Mr. Bharat Madan – President Finance, Shenu Agarwal – CEO Agri Division and Investor relations team.

Key takeaways of the call

In Q1 FY23, Domestic tractor volume increased by 0.4% to 24,608 units and export tractor volumes up by 52.5% to 2,189 units, highest ever in any quarter.

In Q1 FY23, company's tractors in North and Central Regions grew by 4% YoY compared to industry growth of 22%. Company's tractors in Rest Region fell by 4% YoY compared to industry growth of 4%.

Company's Agri Machinery Segment in July 2022 sold 5,360 tractors as against 6,564 tractors sold in July 2021.

Domestic Tractor Market Share in Q1 FY23 stood at 9.3% compared to 10.7% in Q1 FY22. Export tractor market share stood at 6.2%. Management expects to regain its lost market share in coming quarters.

Export through Kubota channel represented 20%+ of total Export volume in Q1 FY23.

During the quarter, farmtrac:Powertrac sales mix stood at 40% and 60% respectively.

During the first quarter of current fiscal industry in Agri sector has witnessed positive trend, after 3 quarter of degrowth. With onset of monsoon and strong kharif crop production, rural liquidity and farmer sentiments are expected to gradually improve.

Although the company took price increase across its product portfolio along with cost reduction efforts, but steep inflation in commodity prices coupled with adverse product mix impact due to industry shift towards lower horsepower segment adversely impacted operating profit for the quarter ended June 2022.

Profits were further impacted due to lower other income due to temporary mark-to-market losses on treasury Investments.

With recent Government actions, management expects Inflation to stabilize in near term and operating leverage to further help in partially diluting the impact on margins in coming quarters.

In Q1 FY23, construction Volume increased by 59% to 966 units on YoY basis. Company's Construction Equipment Segment in July 2022 sold 302 machines as against 367 machines sold in July 2021.

In Q1 FY23, crane contributed 75.3% of total ECE segment revenue, Compactor 4.1%, BHL 11.9% and traded+ spare 8.6%. During the quarter BHL (Backhoe Loader) industry went up 55.4% and PNC (Pick & Carry Crane) industry up by 40.1%. In Q1 FY23, company's BHL market share stood at 1.5%, Compactor 5.5% and Crane 42.5%.

With increased government's thrust on infrastructure and export potential in emerging markets, management expect good recovery in construction business activities in FY23.

Railway Equipment revenue up by 45.2% at Rs 173.4 Crore. Company is witnessing good order booking in its Railway Business and expect a strong fiscal going ahead. Order book for the railway division, at end of June 2022, was more than Rs 850 crore.

Company is witnessing good traction in the tendering process, as Indian Railways began gradually recovering towards pre-pandemic level and long-term growth drivers remaining attractive.

During the quarter conventional orders contributed 33% of total sales in RED segment and NPD (new product development) contributed 67%.

Capex for FY23 will be around Rs 300-350 crore.

For Q1 FY23, Capacity utilization of EAM (Escorts Agri Machinery) segment was around 90% and capacity utilization of Construction Equipment segment was around 40%.