Tractor Industry Growth Expected to be Flat or Marginal in Q3, says Escorts Kubota CFO

In a recent interaction Bharat Madan, the whole-time Director and Chief Financial Officer of Escorts Kubota, shared his insights into the tractor industry's performance for the third quarter of the fiscal year. Madan projected that growth in the tractor industry during this period is likely to be "flat or marginal," citing factors like the shifting of the festive season to October and November.

He noted that the change in the timing of the festive season has impacted demand trends, with October experiencing soft sales due to the shift. However, November is expected to perform better than the previous year. As a result, Madan anticipates that the industry may witness growth of approximately plus or minus two percent, or remain relatively flat for the year.

Looking ahead to the third and fourth quarters, Madan expressed his expectations for marginal growth of around two to three percent in the industry. He attributed the softness in the second quarter to seasonal patterns but emphasized that solid production numbers have ensured healthy margins. Madan also foresees further margin improvement, with expectations of achieving margins in the range of 13 to 14 percent on a yearly basis.

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Furthermore, Madan highlighted the strong growth in the construction segment, driven by government investments in infrastructure. He expects this segment to achieve significant growth, potentially reaching 40 to 50 percent, due to substantial government spending in this space.

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Additionally, Madan pointed out the possibility of "pre-buying" in the last quarter of the year in response to potential changes in emission norms, which could drive demand.

Summing up, Madan mentioned Escorts Kubota's railway business and acknowledged that, even though the current order book may not immediately mirror the substantial growth the business has experienced, the company is fully prepared to fulfill the existing orders over the next six to eight months.

The outlook provided by Bharat Madan underscores the agricultural and construction industry's resilience and adaptability amid changing market dynamics and government initiatives.

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