Escorts yesterday released press
note that they are going to sell the Auto product business to Pune based
company wherein they will transfer the assets basis with valuation post 45- 60
days. The loss making unit used to be the drag of Escorts EBITA and EBIT. It
also impacted the equity price and kept it suppressed for the quite some time.
I in my previous blog recommended reader to invest in Escorts and my analysis
came true. The equity price shot up by more than 15% post news break. The sell
out of the loss making unit will support Escorts earning moving forward.
The latest monsoon in North India
will help Escorts Tractor and construction business along with that it will improve overall margin.
In my point of view, the land
assets of Escorts is huge and along with profitable unit will improve the
overall market cap of the company. I wont be surprised if they start expanding
their business in South India too.
Keep holding the stock for next 4
to 5 Quarter to get very good return from Escorts. If one donot own the equity
then they should use market sellout as an opportunity to accumulate stocks in
small quantity to average out the price
Disclaimer : Contact your
financial advisor before investing
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