My first post to ValuePickr! Would like to know what fellow investors think on Escorts limited. Currently trading at 87. My arguments as under
EBIDTA margins have grown from 6.3% to 9% for 3rd Quarter in line with Management’s Plan. Even if Escorts maintains their current growth rate of 8% for this entire year and Margins at 9%, stock looks very attractive trading only at 5.x for FY13E and FY14E EPS . This implies a mere 10% Industry growth and Margins maintained at 9% can re-rate the stock.
**Key Catalyst **
â Good Monsoon
â Growth from States like Maharashtra and Andhra which were in drought last year.
â Upcoming Elections are expected to bring in more liquidity resulting in to demand for automobiles and consumer durables.
â Appointment of Mr. Nikhil Nanda, Escorts Vision 2020, and focus on EBIDTA at 15% is what we feel will re-rate Escorts Limited.
**Strategic Advantages **
â Strong Hold in North but working on South and West
â New Product Every 6 Months
â Premium Positioning Strategy - Ferrari & FramTrac Executive Series
â Focus on Profitability and Not of Volumes or Capacity Utilization
â Ability to Protect Margins by Increasing Product Prices against Industry Trend of Discounting.
Look forward to hear from you all.
Disclosure : I hold from lower levels and thus may have vested interest.