By Dhruv Joshi, Research Analyst, Mirae Asset Sharekhan.
The strong quarterly results of 61% revenue growth and 200% profit growth reflect the industry’s dependency on the company which continues to outpace the industry growth. With Rs1400crore capex announced, the company looks to capitalise on domestic demand as supply constraints limit customer growth capability. But with announced capex roughly 70% of the company’s net worth, debt would likely increase with debt equity ratio also increasing from 0.46x currently. Expansion remains in the right direction with only concern being a slowdown in tractor demand due to El-Nino.
