Escorts shares at 6-year high; should you invest?

By: | Updated: June 22, 2016 4:17 PM

Escorts shares soared as much as 15.42 per cent on Wednesday and hit their highest level in nearly six years since July 2010.

Escorts shares bse sensexEscorts shares soared as much as 15.42 per cent on Wednesday and hit their highest level in nearly six years since July 2010. (Photo: PTI)

Escorts shares soared as much as 15.42 per cent on Wednesday and hit their highest level in nearly six years since July 2010. At 3.01 pm, shares of the agri-machinery and equipment manufacturer were trading 13.50 per cent up at Rs 206.80.

The scrip opened the day at Rs 184.80 and has touched a high and low of Rs 210.30 and Rs 184.75, respectively, in trade so far. Later, the scrip closed 13.86 per cent up at Rs 207.45.

According to Thomson Reuters data, the stock has cut above the ascending trend channel spanning more than two months alongside its upper Bollinger band, a bullish signal for Escorts. Price volume trend (PVT) indicator of Escorts is also at record high, indicating price rise is supported by volume and MACD is positive and above its signal line which is another positive for the stock.

For the quarter ended March 31, 2016, net profit of the company jumped 28.66 per cent to Rs 16.43 crore against Rs 12.77 crore in the corresponding quarter a year ago.

Brokerage firm Motilal Oswal is bullish on Escorts shares. It believes tractor business (80 per cent revenue share) is likely to see a rebound with sales CAGR of 14 per cent over FY16-18E due to strategic decisions taken over the past two years.

Motilal Oswal in a research report said, “Apart from expectation of normal monsoon in FY17 (after 2 consecutive weak monsoons), Escorts will benefit from the launch of 10 new models, separate dealership for Powertrac and Farmtrac in northern markets to increase service area of dealers, focussed support to selected dealers in the south and west regions to increase market share.”

The brokerage house has ‘Buy’ on Escorts with target price of Rs 283.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition