Escorts Kubota reported a 16.3% rise in revenue for Q2 FY27, yet net profit fell approximately 21% as rising input costs pressured margins. Following weak October tractor sales and earnings, the stock hit a 52-week low. While analysts at Emkay Global maintain a 'buy' rating, they have cut their target price to ₹3,200 due to near-term demand and cost headwinds.
Escorts Kubota shares touched a 52-week low of ₹2,411.60 on November 2, 2026, following the company’s second-quarter earnings report for the fiscal year 2027. While the company recorded a 16.3% year-on-year increase in revenue, reaching ₹3,231.4 crore, its profitability faced significant challenges, with net profit falling by approximately 21% compared to the same period last year.
The decline in profitability was primarily driven by a sharp contraction in operating margins. The EBITDA margin dropped to 9.0%, down significantly from 13.1% in the previous year. This margin pressure stemmed from a combination of rising commodity and energy costs, which outpaced the company's ability to adjust pricing in the short term. Additionally, production levels were higher than actual tractor dispatches, leading to an increase in inventory that further weighed on cost efficiency during the quarter.
The company is also navigating a challenging demand environment. Tractor sales for October 2026 declined by 10% year-on-year to 16,921 units. This slowdown is being attributed to a high base effect and concerns regarding the broader monsoon performance and reservoir levels, which are affecting purchasing power in rural markets. To address rising input costs, the company has announced further price increases for its tractors, set to take effect in November 2026. Management expects the impact of these hikes to be reflected in the final quarter of the fiscal year.
Despite these immediate hurdles, brokerages have maintained a positive long-term outlook. Emkay Global, for instance, kept its 'buy' rating but lowered its target price for the stock to ₹3,200. This revision reflects a more cautious view on the near-term earnings potential, as the firm balances the company’s market share expansion in the construction equipment segment against the current softness in the tractor division.
For investors, the key monitorable in the coming months will be the impact of the planned November price hikes on profit margins. Additionally, the market will be watching for signs of a recovery in domestic tractor demand. The extent to which the company can reduce its inventory levels and manage commodity inflation will be critical factors in determining its financial recovery for the remainder of the fiscal year.