Shares of Escorts Kubota Ltd. declined 5% on Monday, November 2, after the company reported its September quarter results, with profitability taking a hit from elevated commodity costs and an adverse product mix.
The company’s revenue from operations rose 16.2% year-on-year to ₹3,243 crore in Q2 FY27, compared with ₹2,792 crore in the corresponding quarter last year.
However, net profit declined 21.4% YoY to ₹250 crore from ₹318 crore. EBITDA fell 20% to ₹288 crore, compared with ₹360 crore a year ago. EBITDA margin contracted by 410 basis points to 8.9% from 13% in the year-ago quarter.
Segment performance
In the tractor segment, volumes stood at 34,017 units in the September quarter, up 0.4% from 33,877 units in the corresponding quarter last year. However, volumes declined 7.7% sequentially from 36,862 units in Q1 FY27.
Tractor segment revenue increased 10.6% YoY to ₹2,690.1 crore from ₹2,432.9 crore, but declined 2.8% sequentially from ₹2,766.5 crore. The segment’s EBIT margin fell to 7.8% from 12.8% a year ago and 10.8% in the previous quarter. The company attributed the margin pressure to commodity cost inflation and changes in product mix.
The construction equipment segment, meanwhile, reported stronger growth. Sales volumes rose 53.9% YoY to 1,764 units from 1,146 units in the year-ago quarter. Revenue increased 58.6% to ₹536.2 crore from ₹338.1 crore.
The segment’s EBIT margin improved to 7.9%, up 411 basis points from 3.8% in Q2 FY26 and 250 basis points from 5.4% in Q1 FY27. The improvement was mainly driven by operating leverage.
What management said
The company said profitability during the quarter was affected by elevated commodity costs and changes in product mix. While cost pressures remained higher than anticipated, it said it was continuing to focus on operational efficiencies and cost optimisation initiatives across the business.
Assuming a stable commodity environment from Q4 onwards, the company expects margins to improve gradually from the March quarter and return closer to normal levels in FY28. It added that its product pipeline and innovation roadmap continue to support its long-term growth ambitions.