India’s Escorts Kubota mulls sale of railway equipment unit -CNBC-TV18

BENGALURU (Reuters) – India’s Escorts Kubota is considering selling its railway equipment business as it plans to focus on its core tractor business, CNBC-TV18 reported on Tuesday, citing sources with knowledge of the matter.

The report said the company is in talks with investors for a possible sale but did not name them or give a potential deal value. Escorts Kubota told CNBC-TV18 that the news was speculative.

Escorts Kubota, which has a market capitalisation of 328.37 billion Indian rupees ($3.97 billion), did not immediately respond to Reuters’ request for comment.

Its railway equipment business makes brake systems, couplers, suspension systems, friction and rubber products. It accounted for 10% of Escorts Kubota’s revenue in fiscal 2023, but clocked 32% year-on-year growth.

The Faridabad-based company’s biggest business is making agricultural machinery, especially tractors. That accounted for three-fourths of total revenue last fiscal year, while the rest came from making construction equipment.

The company, which says it controls about 10% share of the domestic tractor market, relied on sales of construction and railway equipment to bolster results in the April-June quarter as tractor sales slipped due to the irregular monsoon.

Chairman and Managing Director Nikhil Nanda had said at the time that they expect the railways business’s growth to remain steady due to the increasing need for rail transport locally and internationally.

Escorts Kubota’s stock was down 0.35% on the day. It has risen nearly 42% so far this year. ($1 = 82.7125 Indian rupees)

(Reporting by Ashish Chandra in Bengaluru; Editing by Savio D’Souza)