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A curious case of Escorts Kubota whose shares have outperformed peers over the last six months, but earnings have consistently missed estimates. What is causing this optimism?
Escorts Kubota, one of India's leading tractor manufacturer, has missed earnings estimates for all three quarters of the current financial year as tractor profitability remains under pressure.
However, despite the weakness in financial performance, the company's shares have been outperformers over the last six months, delivering superior returns not only compared to the benchmarks - Nifty 50 and Nifty Auto index, but also against peers like Mahindra & Mahindra and VST Tiller Tractors.
The company's margin has been dented due to high input costs, even slipping into single digits for the last two quarters.