This Rakesh Jhunjhunwala share gets rating upgrade; stock hits 52-week high

Emkay Global Financial Services has upgraded Rakesh Jhunjhunwala's share from hold to buy. The brokerage upgrade Escorts, India's leading tractor manufacturer, comes amid Japan's Kubota getting Escorts' board's approval to increase its shareholding in the Indian firm. On Thursday (18th November), Escorts’ board announced Kubota (a 9% shareholder) will acquire 46.9 million additional shares through preferential allotment plus open offer, and join the Nandas as a co-promoter.    

Kubota’s takeover will substantially improve Escorts’ medium-term growth outlook, based on localization of existing tractor imports currently done by Kubota’s India joint venture (JV), leveraging Escorts for global component supplies to support Kubota’s global sales and technology support in construction equipment, farm implements and high-end tractors, noted Emkay in its report. 

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"We are increasing Escorts’ medium-term (FY23-31E) revenue CAGR to 15% from 11%. Upgrade to Buy with a December 22 target price of Rs 2,140, based on 22x core P/E and net cash of Rs423/share (0.80x book)," said the brokerage.  

Meanwhile, Escorts stocks traded on a new 52-week high-value of Rs 1829.60 per share in Monday's intraday trade on BSE. The spike comes after the outcome of the board meeting on November 18 and a subsequent rating upgrade over an increase in stake by Kubota in India's largest tractor manufacturer.  

Earlier on Thursday, shares of Escorts rose nearly 10% to Rs 1793.15 per share on the BSE in Thursday's intraday trade amid the outcome of the Board meeting of the company.

The spike in Escorts stock price came on Thursday amid the board of directors of the company allowed Japan's Kubota to increase its shareholding in the Indian 'pioneer of farm mechanization in the country, Escorts.    

As per the agreement between Escorts Ltd and Kubota, the latter will increase its stake in the Indian tractor manufacturing company from 9.09% to 14.99% and shares will rise from 12,257,688 to 21,621,414, showed Escorts Ltd BSE filing.  

Big Bull of the Indian share market, Rakesh Jhunjhunwala, holds a 4.8% stake in the company, as per BSE September shareholding pattern. The Indian billionaire holds 6,400,000 shares worth Rs 1153.8 crore as of November 22, 2021, as per Trendlyne, a platform for stock market analysis.  

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