Billionaire investor Rakesh Jhunjhunwala-held Escort shares rallied over 8 per cent in intraday trade on Monday, hitting fresh record high of Rs 1,304.40 on the BSE, after the auto major announced the commissioning of manufacturing operations of a joint venture (JV) with Kubota Corporation. The stock has delivered nearly 150 per cent returns to its shareholders in the last six months. The Escort shares rose from Rs 527.10 on March 19, 2020 to Rs 1,304.40 today. This means the stock has given 147.5 per cent returns to shareholders in the last six month.
In an exchange filing on Friday, the company said that Escorts Kubota India Private Limited (EKI) - a 60:40 joint venture between Japan's Kubota Corporation and Escorts - have started the commercial production of Kubota Tractors from September 25, 2020. The JV, which was established with a total investment of around Rs 300 crore, has annual manufacturing capacity of 50,000 units.
Extending Friday's rally, Escort share price opened higher at Rs 1,238 against previous closing price of Rs 1,203.1 and gained as much as 8.4 per cent to touch record high of Rs 1,304.40, surpassing its previous high of Rs 1,280 touched on September 18, 2020. The stock ended day's trade at Rs 1,295.70 per share, up 7.70 per cent on the BSE. Meanwhile, the S&P BSE Sensex settled at 37,981, up 592 points, or 1.59 per cent.
On the volume front, there was surge in volume trade as 1.62 lakh shares changed hands over the counter as compared to two week average volume of 1 lakh shares on the BSE.
Ace investor Rakesh, his wife Rekha and his company Rare Equity Pvt held 6.97 per cent, or 93,97,600 shares, in the tractor maker during the quarter ended March 2020. On July 22, he sold 2 lakh shares in the company via open market transaction, bringing down his shareholding in Escort to 91,97,600 equity shares or 6.82 per cent.
The stock has jumped nearly 150 per cent from its March lows amid surge in demand for tractors after the government allowed agriculture activities during the first phase of unlock. Adding to it, above average monsoon and revival of demand in the rural segment worked well for the stock.
In August, the auto major reported 80.1 per cent growth in total wholesale to 7,268 tractors as against 4,035 tractors sold in same month last year, owing to robust demand for tractors in the domestic market. It was the highest ever August sales recorded, Escorts said in its regulatory release. The domestic tractor sales grew by 79.40 per cent to 6,750 units from 3,763 units from the year-ago period. Exports also increased by 90.40 per cent YoY to 518 units last month, as against 272 units in August 2019.