We are quite bullish on Escorts. Its tractor business is likely to witness another year of healthy double digit growth in FY19 due to strong rural sentiments on back of higher farm incomes and projection of normal monsoon for third consecutive year.
We are projecting double digit growth in volume led by new product launches and increased focus on exports. Construction equipment segment is witnessing robust demand traction with 29 percent YoY growth in FY18 which we believe will continue in future.
We expect slight dip in EBITDA margins due to rising raw material cost which will put weigh on margins though we are closely watching for average realisation. We have a buy call on Escorts.
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