Escorts Kubota shares hit after net profit declines 20% due to inflation

The company said in a regulatory filing that its profit for the quarter was impacted by lower operating profit. Inflation in commodity prices and the industry's shift towards lower horsepower segments adversely impacted operating profit.

The company secured an increase in revenue from operations to Rs 2,014.9 from ₹1,677 crore in the corresponding period last year.

Earnings before interest, taxes, depreciation, and amortization (EBITDA), a measure of a company's overall financial performance, stood at Rs 201.6, a 15 percent year-on-year decline.

The management expects the margin to improve in the next quarters owing to a decrease in commodity prices and the festive season.

"On the margin front like it is mentioned since the benefit of this deflation will start factoring in the next few quarters so hopefully by Q4, when we exit the year we should be back to a normal margin level,"  said, Bharat Madan, Group CFO, Escorts Kubota told CNBCTV18.

Hopefully, by next year in FY24, we should be able to go back to the normal market share levels of the 11.50 percent range, he added.

Meanwhile, brokerage firm CLSA downgraded the shares of Escorts Kubota to 'sell', with a revised target price of Rs 1,612. The brokerage house notes that the big miss on margin led to a negative surprise.