In this article, we look at two stocks, both from the Tractors & Automobile sector, recommended by the Trade Brains Portal to buy for an upside potential of more than 25%. We also analyzed the market’s performance yesterday to understand what may lie ahead for the stock indices in the coming days.
1. Escorts Kubota Ltd
- CMP: ₹ 3,292
- Target: ₹ 3,950
- Upside: 20%
- Time frame: 12 Months
Why it’s recommended
Escorts Kubota is one of India’s leading manufacturers specializing in high-quality Agri Machinery Equipment, including tractors, sprayers, and tillage tools. The company has a diversified business portfolio serving a diverse clientele in over 80 countries across the agriculture, construction, and landscaping sectors.
In 2018, Kubota and Escorts joined hands and set up a 60:40 JV by establishing a high-end tractor manufacturing capacity in Haryana. The company operates 3 plants in India with a production capacity exceeding 1.7 lakh tractors annually and manufacturing 2,500 tractors with a subsidiary plant in Poland, Europe.
In FY25, the company reported revenue from operations Rs 10,243.9 crore, up by 4.5%, EBITDA stood at Rs 1,165.3 crore, up by 3% YoY, with a stable EBITDA margin of 11.4%, PAT stood at Rs 1,265 crore, registering growth of 17.5% YoY.
The company saw a rise in tractor volume exports to 36.6% YoY, as compared to industry growth of 4%, as of Q4FY25. Tractor sales stood at 115,554 units, up by 1%, with a market share of 12.4% in the tractor business. Escorts has benefited after partnering with Kubota as 70% of exports come from the Kubota network, apart from operational efficiency and capacity expansion.
Going forward, the company has plans for setting up a greenfield plant to integrate various manufacturing processes, leading to an increase in capacity across different verticals for tractor manufacturing, CE manufacturing, spare parts manufacturing, and a dedicated line for manufacturing engines for Kubota. The company is planning to invest Rs 4,500-5,000 crores over the next 3-4 years, with a focus on setting up a greenfield plant.
The Management expects the tractor industry to grow continuously due to favorable macroeconomic conditions such as a good rabi harvest, higher crop prices, and an above-normal monsoon prediction for 2025, coupled with a sufficient water level in the reservoir.
Risk Factors
The company is exposed to market concentration risk as 95% of EKL’s tractor sale volumes are derived from the domestic market, which makes it highly dependent on the performance of the domestic market. EKL has limited presence in the west and has less exposure to exports. EKL is also susceptible to volatility in raw material prices which affects the profitability of the company.
2. Bajaj Auto Ltd
- CMP: ₹ 8,645
- Target: ₹ 9,856
- Upside: 14%
- Time frame: 12 Months
Why it’s recommended
Incorporated in 1945, BAL is the largest player in the domestic three-wheeler segment, with a market share of around 75% and a leading automotive manufacturer of 2Ws and 3Ws. The company has five manufacturing plants, of which two are in Chakan and one each in Waluj, Akurdi, and Pantnagar having a total installed capacity of 7.1 million units per annum. B
AL is the 2nd largest player in the domestic motorcycle segment in terms of volume and is India’s largest exporter of 2Ws and held a market share of 18.2% of motorcycle sales in India and a 46.3% share in the export market, with a presence in over 70 countries.
In FY25, the company reported new benchmarks with revenue hitting the peak of Rs 52,468.96 crore, up by 13%, led by record sales of both vehicles and spares. The company’s Q4 FY25 sales of 2-wheelers stood at 943,563 units and for commercial vehicles, stood at 159,371 units.
For May 2025, sales of 2-wheelers were at 332,370 units, and sales of commercial vehicles stood at 52,251 units; thus, total sales volume grew by 8% YoY in May.Volumes rose 7% YoY, with a strong domestic performance in H1 that was followed by a relatively soft H2, which was more than made up by the solid rebound in exports, reflecting the versatility of the company’s business model to changing market conditions.
Going forward, the company expects around 20% plus growth on a year-on-year basis in the export business unit in the coming years and committed to deliver Rs 1,000 crore of capex under the PLI scheme in a 5-year horizon and is likely to incur a capex of Rs 6-7 billion in FY25-FY26, largely towards maintenance activities.
The company approved a capital infusion of about Rs 2,300 crore into Bajaj Auto Credit Limited, of which Rs 955 crore is already infused, and expects to invest Rs 1,400 crore by next year. They received approval for further expansion of export capacity to 50,000 units plus level per annum by Q4 FY26 for their Dominar brand, which has risen ahead of several established European brands in the personal segment.
Risk Factors
The country’s macroeconomic situation and the automobile industry are strongly related. Industry is vulnerable to geopolitical issues, like the Trump administration’s tariffs, which might cause supply chain disruption and exorbitant expenses. Other macro events that could affect the business include changes in national demand and preferences, global inflation, the availability of input materials, and a fall in per capita income across economies, which will reduce people’s purchasing power.
Hero MotoCorp, Honda Motorcycles, Suzuki Motorcycles, and TVS Motors are among the fiercely competitive companies that are always introducing new models in an effort to increase their market position in the 2W segment.
Market Recap June 9th, 2025
With the RBI’s decision to lower the repo rate by 50 basis points to 5.50% and change its policy stance to neutral on Friday, the broad indices have mostly moved in the green, with the Nifty 50 opening above the 25,000 mark. The Nifty 50 opened the day higher at 25,160, the day’s high, and continued to trade flatly all day. At 25,103.20, up 100 points or 0.4%, the Nifty index ended above all four 20/50/100/200 EMAs. Its daily RSI was 49. The BSE Sensex, which opened at 82,574.55, rose to 82,669, and closed at 82,445.21, up 256.22 points, or 0.31%, also showed optimism. The Nifty Bank index closed at 56,839.60, up 261 points or 0.46%, after surpassing the 57,000 mark and hitting its highest point ever, 57,049.5.
The Nifty Smallcap 50 index led the gains among the top sectoral performers, rising 166.8 points, or 1.87%, to close at 9,108.15. The highest small-cap gainer was Five-Star Business Finance, which rose 10%; IIFL Finance likewise jumped 8%; and Multi Commodity Exchange of India gained 7.25%, this comes after the RBI’s rate cut decision. With gains of up to 4% for Bank of India, Bank of Maharashtra, and Indian Bank, the Nifty PSU Bank followed the lead behind with 108.15 points, or 1.52%, closing at 7,208.45. With Hyundai Motor, Intergloble Aviation, Cholamandalam Investment, and PFC rising up to 4%, the Nifty Next 50 Index also saw gains, closing at 68,843 up 850.65 points, or 1.25%. The Nifty Realty Index was the only sectoral index in negative, closing at 1,038 down -1.45 points, or -0.14% with profit bookings in Brigade Enterprises, Sobha, Prestige Estates, and Macrotech.
The Asian markets performed on a positive note and opened higher on Monday as the US and China trade negotiations resumed with China reportedly granting approvals for the export of rare earths and US’ Boeing began commercial jet deliveries to China. Among the Asia-Pacific markets, Hang Seng index rose the highest with a surge of 1.63% or 388.89 points, closing at 24,181.43, followed by South Korea’s Kospi index climbed 1.55%, Shanghai index was up by 0.43%, Nikkei 225 gained 0.92% and Shenzhen index rose by 0.65%.
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