Fundamentals

ESCORTS LTD 

Ticker : 500495
BUY: Rs 694.30
Target: Rs 798 

Escorts Limited is an engineering company which offers agricultural tractors and construction equipments. In Q2FY19, the company’s revenue increased by 15.4 percent YoY, led by strong growth in railway equipment and construction segments. Domestic tractor volumes grew by 4 per cent YoY and the management has guided 12-15 per cent growth in FY19. The festive season will lead to uptick in demand during H2FY19 and exports might grow by 50 per cent in FY19. The construction equipment and railway equipment segments are expected to grow by 30 per cent each in FY19. The EBITDA and PAT for the quarter were up by 11.8 per cent and 32.3 per cent YoY, respectively. The railway segment has bagged orders worth Rs 400 crore which are to be executed in the next 12-13 months. Considering all these factors, we recommend it as a BUY. 

UNITED SPIRITS LTD. 

Ticker : 532432
BUY: Rs 635.10
Target: Rs 708 

United Spirits Ltd is the largest beverage alcohol company in India engaged in the manufacture, sale and distribution of beverage alcohol. It has brand portfolio with over 100 brands of scotch whisky, IMFL whisky, brandy, rum, vodka, gin and wine. In Q2FY19, the company’s revenue was up by 14.2 per cent YoY, led by robust growth in popular and prestige & above (P&A) segments. Its EBITDA grew by 36.1 per cent YoY and EBITDA margin improved by 313 bps to 19.4 per cent. The PAT for the quarter jumped by 39 per cent YoY to Rs 258.7 crore from Rs 153.1 crore. The management has guided double digit growth in revenue in FY19, led by double digit growth in P&A segment. The higher demand for premium and popular brands with hiked prices across India will lead to higher revenue and margins. Thus, we recommend it as a BUY.