Rakesh Jhunjhunwala portfolio auto stock downgraded; target price slashed—Here is why!

Shares of this Rakesh Jhunjhunwala stock have been downgraded from buy to sell on account of weak Q1 earnings in the April-June quarter. Rakesh Jhunjhunwala has made a fresh entry in the auto stock in the recently concluded quarter. The billionaire investor had bought over 18 lakh shares in the tractor manufacturer stock in the quarter ended on June30, 2022.  

As per the latest corporate filings, the Big Bull of the Indian market, Jhunjhunwala 18,30,388 shares or 1.39% stake in Escorts Kubota, which reported a 20.35% decline in net profit to Rs 147.5 crore in the Q1FY23. The tractor manufacturer had registered a standalone net profit of Rs 185.2 crore in the corresponding quarter of the previous year. 

Fondly called Warren Buffet of the Indian stock market, the celebrity investor held 5.2% stake in the leading tractor and farm machinery manufacturer Escorts, which rebrand itself as “Escorts Kubota Limited, in the quarter ended December 31, 2021.  

Escorts Kubota downgraded

Meanwhile, global brokerages have downgraded and slashed target price of Escorts Kubota stock after the tractor and farm machinery manufacturer witnessed massive slump in net profit in the April-June quarter 

CLSA, which downgraded the stock from buy to sell, also slashed Escorts Kubota target price from Rs 2069 to Rs 1612. The action from the brokerage came after the company sales dropped 18% year on year (YoY) in July.  

Saying Kubota-Escorts synergies is yet to play out, it cut earnings estimates of the company by 24%-26% over FY23-24 on 7% lower volume forecast and big miss in margins in the June quarter. 

JP Morgan downgraded Escorts Kubota from overweight to neutral after the company missed estimates. The brokerage reduced the target price from Rs 1800 to Rs 1565.  

Rakesh Jhunjhunwala Portfolio 2022

As per latest corporate filings, Rakesh Jhunjhunwala holds as many as 32 stocks in the Jun quarter. Rakesh Jhunjhunwala portfolio net worth has been pegged at over Rs 31,304.8 crore as on August 2, according to stock market analysis portal trendlyne.com. 

Escorts Kubota Q1FY23 Results 

Earlier, the Company on Monday reported net profit of Rs 147.5 crore in quarter ended June 30, 2022, as against a profit of Rs 185.2 crore in corresponding quarter of the previous fiscal, Escorts Kubota said in an exchange filing.  

Revenue from operations stood at Rs 2,014.9 crores in quarter ended June 2022 as against Rs 1,677.0 crores in same quarter of the previous fiscal. EBIDTA for the quarter ended June 30, 2022 came at Rs 201.6 crore as against Rs 238.8 crore in corresponding quarter of the previous fiscal.   

"We are excited to be Escorts Kubota Limited (EKL) now. During the first quarter of current fiscal industry in Agri sector has witnessed positive trend, after 3 quarter of degrowth. With onset of monsoon, and likely record kharif crop production, rural liquidity and farmer sentiments are expected to gradually improve," said Nikhil Nanda, Chairman and Managing Director, on Q1 earnings of the company  

He further said that in the construction business, the company has outperformed the industry in served markets and expect growth momentum to continue with Government's thrust on infrastructure development. 

"We are witnessing good order booking in our Railway Business and expect a strong fiscal going ahead. With recent Government actions, Inflation may stabilise in near term and operating leverage may further possibly help in partially diluting the impact on margins in coming quarters," Nanda added.