Escorts Kubota Explores Railway Business Sale to Sharpen Tractor Focus

Escorts Kubota, a prominent tractor manufacturer, is actively contemplating the potential sale of its railway business. This strategic move aims to increase the company's focus on its core tractor operations, according to sources.

According to reports, it was also revealed that the ongoing discussions with potential investors indicate the seriousness of the company's consideration to divest its railway segment.

Recent months have witnessed a remarkable surge in stocks associated with railways, elevating market capitalization for companies like Texmaco and Titagarh Wagons by threefold within the last five months.

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It's important to highlight that the tractor manufacturer's current promoter, Kubota Corporation, has limited involvement in the railway domain, underlining its lesser presence in this sector.

The financial year 2023 saw Escorts Kubota's railway business achieve a revenue of Rs 842 crore, reflecting a remarkable 33 % growth compared to the preceding fiscal year.

During the same financial year, the railway segment contributed 10 % to the overall top line, exhibiting a tripled share over the past decade. A stark contrast is observed in its share, which stood at a mere 3.1 % around the financial year 2014.

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Responding to inquiries, Escorts Kubota's management characterized the news of the railways business sale plan as speculative and refrained from providing a direct comment. They emphasized their continuous exploration of diverse business options.

At present, Escorts Kubota's shares are trading near the day's low, indicating a 0.7 % decrease at Rs 3,012. Despite this, the stock remains close to its historical peak.

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