Summary
Escorts Kubota Limited - Q3 FY26 Earnings Call Summary Tuesday, February 10, 2026
Event Participants
Executives 4 Bharat Madan (WTD & CFO), Neeraj Mehra (Chief Officer, Tractor Business), Prateek Singhal (Investor Relations & ESG), Sanjeev Bajaj (Chief Officer, Construction Equipment)
Analysts 6 Ajox Frederick, Ayush Anand, Gunjan Prithyani, Jinesh Gandhi, Mitul Shah, Vijay
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Revenue | ₹3,261.4 crores | +11.1% YoY; driven by strong tractor volumes and agri-solution growth. |
| EBITDA | ₹438.7 crores | +30.9% YoY; highest-ever quarterly EBITDA reported. |
| EBITDA Margin | 13.5% | +203 bps YoY; aided by easing material costs and operating leverage. |
| Adjusted Net Profit | ₹401.6 crores | +38.3% YoY; adjusted for ₹52.5 crore one-time labor code impact. |
| Tractor Volumes | 36,955 units | +13.5% YoY; growth moderated by regional underperformance in North/Central India. |
| Agri Machinery EBIT | 13.5% | +310 bps YoY; improved due to cost control and soft commodity prices. |
| CE Volumes | 1,716 units | -13.7% YoY; decline narrowing sequentially from -23.7% in Q1. |
| CE EBIT Margin | 6.6% | -440 bps YoY; impacted by steel price inflation and lower volumes. |
| Special Dividend | ₹18.0 per share | One-time payout following the successful divestment of the Railway business. |
Geographic & Segment Commentary
- Agri Machinery: Revenue reached ₹2,769.6 crores (+14.6% YoY) with domestic sales at 35,373 units. While Southern and Western regions grew by 34.2%, North and Central markets underperformed. The segment saw traction in the Promaxx series and introduced next-gen rice transplanters (KA6, KA8).
- Construction Equipment (CE): Revenue stood at ₹489.9 crores, down from ₹515.7 crores YoY. Performance was hindered by a high base effect from pre-buying in the previous year and slow infrastructure fund flow. Management noted early signs of stabilization with January volumes showing only a 3.7% dip.
- Exports: Tractor exports surged ~63% to 1,582 units, with 68% of volume moving through the Kubota Global Network. Management expects continued double-digit growth despite a rising base, focusing on leveraging India as a global manufacturing hub.
Company-Specific & Strategic Commentary
- Greenfield Expansion: The Board approved land acquisition for a new plant with an indicative investment of ₹2,268 million. While commercial production is slated for 2029-30, timelines may be accelerated based on demand and the shifting of global Kubota models to India.
- Product Refresh: Over the next 6-8 months, new models and upgrades will launch across all brands to address product gaps. A full market impact is anticipated by the end of FY27, specifically targeting the 45-50 HP segment where liquidity is high.
- Localization Strategy: To improve Kubota brand margins, the company is developing an “Indian Platform” using local engines and components. This aims to reduce the current high cost-structure of imported components and expand the addressable market from 40-50% to over 70%.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Tractor Industry | 11.5 lakh units (FY26) | Expecting a new peak driven by GST 2.0, high MSPs, and healthy reservoirs. |
| Export Growth | Double-digit momentum | Shift of global models to India should offset a higher base in coming years. |
| CE Industry | 6-7% CAGR till FY30 | Growth tied to ₹12.2 lakh crore public CAPEX; expected to recover in Q4/Q1 FY27. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regional Disparity | Underperformance in North and Central India remains a drag on domestic tractor market share. |
| Commodity Inflation | Recent spikes in copper, aluminum, and steel (from Jan) are pressuring margins, particularly in the CE segment. |
| Subsidy Dependency | Management cautioned that while macro factors are strong, the tapering of state-level subsidies could lead to future demand deceleration. |
Q&A Highlights
Domestic Market Shifts
- Question: Is the current industry growth sustainable or just a temporary spike from subsidies? (Gunjan Prithyani)
- Answer: Growth is driven by GST 2.0 and reservoir levels, not just subsidies. While FY27 is hard to forecast, Q4 and Q1 FY27 look robust (Neeraj Mehra). There is a structural shift toward the 45-50 HP segment as farmers use GST savings for higher-spec tractors (Neeraj Mehra).
Global Supply Chain & Tariffs
- Question: Will the EU FTA or potential US tariffs impact tractor exports? (Jinesh Gandhi)
- Answer: EU tractor duties are already zero, so FTA impact is minimal. Regarding the US, even with potential tariffs, India’s lower production costs make it a competitive manufacturing hub compared to Japan (Bharat Madan).
Capacity & Margins
- Question: Why is the new plant delivery timeline so far out? (Vikram Damani)
- Answer: Existing capacity can still be optimized by 10-15%. The 2029-30 timeline is for the full Greenfield facility, which serves as a long-term strategic shift for global sourcing (Bharat Madan).
Key Takeaway
Escorts Kubota delivered a record-breaking Q3 FY26 with EBITDA and adjusted PAT reaching all-time highs of ₹438.7 crores and ₹401.6 crores, respectively. The Agribusiness remains the primary engine, growing 14.6% YoY, while the Construction Equipment segment is showing nascent signs of recovery after a period of contraction. Strategically, the company is pivoting toward a “Global Hub” model, investing in land for substantial Greenfield expansion and localizing the Kubota product line to enhance margins. While the outlook for FY26 is optimistic with an industry target of 11.5 lakh tractor units, management remains watchful of commodity price volatility in steel and non-ferrous metals and potential regional demand saturation in North India. The company is positioned for steady double-digit export growth and a product-led recovery in the domestic tractor market by FY27.
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