Shares of Escorts fell 5.5 per cent to 1,704 rupees on BSE in trade during Monday. The stock is down 8 percent in the past two trading days as Japan’s Kubota Corporation’s open offer for an additional 28.42 percent stake in the company expires today. The stock reached a record high of Rs 1,927 on December 31, 2021.
On November 18, 2021, Escorts’ Board of Directors announced that Kubota will acquire 37.49 million shares, or 28.42 percent of the expanded voting share capital. The open offer price was set at Rs 2,000 per share and the open offer of the tender shares was opened on March 14, 2022 and closed on March 28, 2022.
Offer shares from the general shareholders will be accepted on a pro-rata basis, subject to the acquisition of a maximum of 37.49 million shares. However, there is no guarantee that all shares of ownership submitted by the general shareholders in the open offer will be accepted. Unacceptable shares will be returned to the general shareholders. About 43.62 million shares of stock were in the open offer as of March 25, 2022, according to a disclosure made by Morgan Stanley India to the stock exchanges.
Escorts are engaged in the manufacture of earthmoving and material handling equipment, agricultural tractors, hydraulic shock absorbers, internal combustion engines, etc. used by railroads. Kubota is the largest Japanese agricultural machinery and construction equipment company that owns a 9.09 percent stake in Escorts. Kubota is expected to increase its stake to 53.5 percent through preferential share issue, open offer and share reduction.
Meanwhile, Escorts Agri Machinery (EAM) reported a 45.6 percent year-over-year decline in tractor sales at 6,114 units in February 2022 versus 11,230 tractors sold in February 2021.” Sharp prices due to commodity price inflation and above normal inventory levels with the channel.”
Going forward, the company expects higher spring sowing this year, good level of water tanks, increased union budget allocation for the rural and agricultural sector, and regular monsoon trends to be positive catalysts for the tractor industry in the coming year.