Ace investor Rakesh Jhunjhunwala reduced his stake in auto firm Escorts after the firm declined around 15 percent in 2022 year-to-date (YTD). The investor held over a 5 percent stake in the tractor maker in the previous quarter, but as of the March quarter data, he is not among its key shareholders.
The recent reduction by such a seasoned investor might lead to many retail investors following in his footsteps.
Data available with the exchange showed that Jhunjhunwala’s name was not among the 'Individual share capital in excess of Rs. 2 Lacs' of the company as of March 31, 2022. He owned a 5.22 percent equity in the company as of December 31, 2021. Earlier this quarter, he increased his stake in the firm a bit as well, he had a 5.68 percent stake, or 75 lakh shares, in Escorts as of February 18, 2022.
While 2022 might not have been the year for the firm yet, the auto firm has risen over 150 percent in the last 2 years. The investor had over 7 percent equity in the firm in 2020 before the lockdown.
In the December quarter (Q3FY22), the firm reported a 32 percent year-on-year decline in its consolidated net profit at ₹194 crore as against a net profit of ₹287 crore in the year-ago period. Sequentially, the net profit was up 12 percent from ₹173 crore.
The company's consolidated revenue from operations was down nearly 3 percent to ₹1,984 crore in Q3FY22 versus ₹2,042 crore in the same quarter last fiscal. Further, for the quarter ended December 2021, Tractor volumes came in at 25,325 units, up 20.2 percent sequentially and down 19.8 percent YoY.
In FY22, Escorts sold 87,043 units in the domestic market, down 14.50 percent from 1,01,848 units sold a year ago. Meanwhile, exports jumped 47 percent YoY to 7,185 units in FY22.
Chairman and Managing Director Nikhil Nanda said, post the December quarter results, "The tractor industry has now been impacted for two consecutive quarters due to high base of last year, a delayed harvest of Kharif crops owing to late monsoon rains this year which affected the rural cash flows and the retail demand."
"Going forward, we do expect cash flows to improve with better Kharif procurement and a positive outlook with good Rabi sowing. While high inflation remains a concern, we are hopeful of macro-economic factors to be in favour of agriculture to boost rural demand," he added.
In an earlier report, domestic brokerage house Nirmal Bang Securities said that it sees FY24 to be a tad volatile year for Escorts due to general elections and changes in emission norms, but expects pre-buying to drive demand. The medium-term growth outlook stands at a CAGR of 4-6 percent while over the longer term and the industry will grow at a CAGR of 7-9 percent, it noted.
23 analysts polled by MintGenie have a 'hold' rating on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
