Escorts Limited (NSE: ESCORTS) Q1 2026 Earnings Call dated Aug. 04, 2025
Corporate Participants:
Unidentified Speaker
Prateek Singhal — Investor Relations
Bharat Madan — Whole-time Director and Chief Financial Officer
Neeraj Mehra — Chief Officer, Tractor Business Division
Sanjeev Bajaj — Chief Officer, Construction Equipment Business Division
Analysts:
Unidentified Participant
Vivek Kumar — Analyst
Raghunandhan — Analyst
Vaishnavi — Analyst
Mumuksh Mandlesha — Analyst
Vipul Agrawal — Analyst
Amit Hiranandani — Analyst
Mitul Shah — Analyst
Gunjan Prithyani — Analyst
Vishakha Maliwal — Analyst
Amit Goela — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Iscods Kubuta Limited Q1FY26 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participants lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Vivek Kumar from ICICI Security. Thank you. And over to you sir.
Vivek Kumar — Analyst
Thank you Pari. Good evening. On behalf of ICICI Securities Limited, I welcome you all for Sports Kubota Limited’s Q1 FYNN conference call. I also take this opportunity to welcome the management team from the company today. We have with us Mr. Bharat Madan, Full Time Director and Chief Financial Officer. Mr. Neeraj Mehra, Chief Officer, Tractor Business Division. Mr. Sanjeev Bajaj, Chief Officer, Construction Equipment Business Division. Mr. Sanjeeev Garg, Head Finance and Tax and Mr. Prateek Singhal, Investor Relations and ESG. We will start the call with brief opening remarks from the management followed by Q and A.
Before we start, I would also like to add that some of the statements made by the company in today’s call will be forward looking in nature and are subject to risks as outlined in the annual report and investor releases of the company. Over to the management now for their opening remarks. Thank you.
Prateek Singhal — Investor Relations
Thank you, Vivek. Good evening everyone and thank you all for joining us today. Few highlights of the company’s standalone financial performance for the quarter ended June 2025 are as follows. Operating revenue from continuing operation at 2483.4 crore EBITDA as 325 crores up by 2.6% YoY. The EBITDA margin in Q1 now stand at 13.1% up 69 basis point YoY PBT before exceptional items from continuing operation as 417.9 crore up by 19.3% YoY. During that quarter there was an exceptional gain of rupees 76 crore on account of sale of land and building of agri machinery spare part Business division.
Net profit from continuing operation at 372.6 crore up by 40.0% YoY. During the quarter the red business divestment was concluded and the income of rupees 1601.7 crore net of transition cost from the divestment has been accounted for in the financial statement. Under discontinued operations, net profit including discontinued operation as 1400.2 crore EPS stands at 127.29 rupees as compared to 27.63 rupees YoY on consolidated basis. Company financial performance for the quarter ended June 2025 is as follows. Revenue from continuing operation as Rupee 2500.1 crore EBITDA as Rupees 321.4 crore with margin of 12.9% up 16 basis point year on year.
Net profit from continuing operations at 369.5 crores. Net profit including discontinued operation is 1397.1 crore. Moving on to the segmental business performance starting with agri machinery business. On tractor business in Q1FY26 the total tractor industry volume domestic plus export was at 3 lakh 3.11 lakh tractor up by 8.7% against corresponding quarter last year. Our total volume was at 30,581 tractors as against 30,370 tractor in the corresponding quarter previous year. On the domestic front, the tractor industry in Q1 FY26 was at 2.86,000 tractors up by 9.2% against the corresponding quarter Last fiscal industry in north and Central region show a slight growth of 0.5% while the rest of the country experienced a substantial growth of 19.3%.
This has impacted our domestic volume with our domestic volume as 28,848 tractors as compared to 29,409 tractors in the corresponding quarter last year. Continuing with our strategy to offer innovative products during the last quarter we launched Promex in Powertech brand resulting in an increase of our pharmtech market share in most of the state where it was introduced covering nearly 70% of the industry. Recently we have launched Kubota M new series under Kubota brand in 41-50hp category. Powered by advanced and efficient KQ4P engine, the MU4201 incorporates Balancer shaft technology delivering superior comfort and smooth performance. The impact of this launch will be visible in the next quarter.
Going forward, we will be launching the Wetland series in the coming quarters under powertrak brand. These product launches across all brand are expected to drive market share growth with the full year impact becoming clearly visible in the next financial year. Looking ahead with timely and widespread above normal monsoon rain and improved reservoir levels, rural sentiment remain positive and pharma cash flow are strengthening. We remain optimistic about sustained growth in the tractor industry and expect the current momentum to continue through the later part of the current fiscal on the export front the tractor industry in Q1 FY26 at 25.3 thousand tractors up by 2.7% as against 24.6 thousand tractors in the corresponding quarter.
Our export volume came at 1733 tractors up by 80.3% against 961 tractors in the corresponding quarter. During the quarter. Sales through Kubota Global Network account for approximately 52% of the total export. Non tractor revenue comprising agri solution business, engine business and service and spare part business in Q1 FY 26 constitute 18% of the agri machinery segment revenue against 19% in the corresponding and the sequential quarter. Agri machinery product segment revenue came at 2181.5 crore at a raised 2171.7 crores in the corresponding quarter. EBIT margin for the agri machinery business were up by 92 basis point at 12.6% as against 11.7% in the corresponding quarter led by softening in the material cost.
Coming on to the construction equipment business in Q1 FY26 serve industry volume comprising crane backloader, mini excavator and compactor was down approximately 14% as against corresponding quarter last year. This growth was primarily driven by the crane industry which was down approximately 29% as compared to the corresponding quarter. Our total volume for construction equipment business at 11055 machines as against 1382 machines in the corresponding quarter. Our grain segment outperformed the industry resulting in a market share gain of roughly 150 basis point to 41% as compared to the corresponding quarter and Mini excavated gained strong traction with a market share of increase of around 600/basis point yoy reaching 19% in the quarter.
Construction equipment segment came revenue came at 301.5 crore as against 380.6 crore in the corresponding quarter. EBIT margin for the quarter ended June 25 for the construction equipment came at 5.8% as against 10.3% in the corresponding quarter. Adversely impacted due to clearance of inventory of all emission norm product and transition to new emission norm compliant product as our commitment to innovation and focus on introducing of new product. Recently we have launched Hydra 12 pick and carry grain. This model features advanced hydraulics and a powerful engine to deliver optimal performance. With this initiative control and enhanced safety feature, the Hydra 12 is designed to offer superior efficiency and reliability making it pick a choice for operator across diversified job sites.
The construction equipment market is facing challenges due to decreased construction activities during the monsoon season, project delay and a slow sale for by high as product pricing following changes in the emission norm. However, with the government allocating a larger budget for CAPEX expenditure this year, we anticipate an increase in infrastructure products which could lead to boost in demand for construction equipment after the monsoon season. We expect to see improvement in the Demand during the second half of the current financial year 2026. Moving on to the railway equipment business, that’s the discontinued operation. During the quarter ended June 25, the company transferred the railway equipment business to start Sona BLW Precision Forging limited Sona Comstar.
Upon completion of the condition specified in the business transfer agreement effective from 1 June 2025, the profit after tax from the sale of RD business at 1004.4 crore has been accounted for. The financial statement as income from discontinued operation. Now I will request the moderator to open the floor for the Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone phone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Raghun Andan from Nuvama Research. Please go ahead.
Raghunandhan
Thank you sir. For the opportunity. Sir, starting with exports for tractors, it has been a very strong performance in the first four months. There is a 63.5% growth. Can you talk about what is helping the strong exports? How do you see the outlook for this year?
Bharat Madan
Yeah, thanks. Raghu, this is Bharat Madan. So I think if you look at the numbers the last year our base was very low on export in this first three months. That’s why you’re seeing almost 80% growth coming in. But if you look at the numbers now, we have stabilized export at about 500600 tractors per month. So we expect the similar momentum will continue in the balance of the year. So it indicated we’ll be looking at 25% 30% growth this year on the total export volume over last year. But now since the base will also keep on improving for the last year numbers.
So maybe the growth rate will be slightly lower as you would have noticed in the month of July also. But we expect the number now momentum will be there and will continue to be in this range of 506 million cat plus each month.
Raghunandhan
And which markets are doing well?
Bharat Madan
Sir, so major exports are the European market only. Most of the competitive factors are being dispatched to Europe. But obviously we are catering to more than 80 countries in export and obviously the numbers will continue to be there. But the major volume is still coming from European market.
Raghunandhan
Thank you for that, sir. And on the UP plant construction and land acquisition, if you can give some updates, what is happening there? Do you think that this calendar year we would get the land and commence the construction? And are you seeing any delays happening on the regulatory side?
Bharat Madan
There have been certain delays with the UP government because we have in constant touch with them. I think there was some delay in acquiring the land from the farmers. So still learning from the land parcel which we are interested in, some portion of that land is still to be acquired from the farmers. So government is committing they’ll be able to complete the requisition within next one month or so. I think once the acquisition is completed by them then our process will start. So to your question, yes, we expect we should be able to close it.
So I don’t know whether this calendar year, but definitely within this fiscal year the equation should get completed.
Raghunandhan
Got it sir. Thanks for that. To Meera sir, on the new products, you have a very strong pipeline. Promax Farmtrak has done initially well and also you have the Kubota mu, the Powertrak Padi specialist and I think even the Promax second phase to come by end of the year. If you can talk about how do you expect these products to help in terms of positioning of escorts, the market share potential and especially you know, in the south region where Padi specialist tractors, how they can strengthen the position there. Thank you.
Neeraj Mehra
Yeah, hi Raghu, this is Neeraj this side. Yeah, so you have rightly said the new products are actually helping us grow because the industry growth actually to a very large extent is not favorable from ETL’s perspective. So promax phase one is doing well. And in whatever states that we have introduced Farm track market share has grown though it is early days yet and the groups are marginal. But we are seeing positive trends also now with the very recent introduction of Kubota and the Wetland series. By the end of quarter two or early quarter three in power track, we should see some positivity in the southern markets or the eastern part of the country where the paddy is there.
So we can see some positive results starting quarter four. But next year, next financial year would actually be the game changer in these markets.
Raghunandhan
Got it sir. I was trying to understand that we have a adverse regional mix. Can the new products offset that for us and say H2, do you expect to grow in line with industry on all India basis.
Neeraj Mehra
Yes, you are right. So the Kubota introduction as well as the Patrack wetland series they will to some extent help in bridging this industry gap. That deviation is there. And also next year a couple of other launches are introduced are planned. Actually as you’ve already mentioned Promax phase two and also Wetland phase two. So I think the pipeline is very strong and we should see our market share growing in our first while weak markets.
Raghunandhan
Thank you very much sir. We have started off on a good margin trajectory in Q1. So given the focus on margins, the synergy benefits how do you see the broad range of markets for FY26? That’s the last question from my end.
Bharat Madan
In the first quarter the commodity prices were soft for the tractor industry. So we don’t see much impact really coming in from the inflation perspective. But now of late we think the metal prices have started hardening. So that impact will start getting visible now from Q2 onwards. So I think overall our guidance for full year will still remain in the range of around 12.5% sort of margin for overall business.
Raghunandhan
Thank you very much sir. I fall back to the team.
operator
Thank you. The next question is from the line of Vaishnavi from Craving Alpha Wealth Fund. Please go ahead.
Vaishnavi
Good afternoon sir. Thank you for this opportunity I have just two questions to ask. The first one is related to exports. What percentage of export revenue is routed to Kubota network? And what is our target of export revenue? The percentage of total revenue by FY27.
Bharat Madan
I think as Prateek mentioned in the opening comments, in the first quarter 52% of the exports happened to quota network. And we expect the number will only keep on improving I think as we move forward. I think overall right now our total export revenue is quite low. It’s about 5, 6% only for the total top line. But our midterm business target for next four, five years is to take it to about 15% level.
Vaishnavi
But can you please repeat the number again? 15 to 15%.
Bharat Madan
So right now it’s 5 to 6%. But going forward in the mid term business plan our target is to take it to 15% level.
Vaishnavi
Okay sir, my second question is regarding the Yupi plant. When can we expect the phase one of the production to commence in the UP plant?
Bharat Madan
See right now we are still waiting for the land acquisition process to be completed with the government is delayed now on that project by almost six months. So they have not been able to complete the land acquisition from the farmers. I think once they complete the acquisition then our process will start which will include your all testing for soil, water, environment testing and all of the formalities. So we expect within this fiscal year we should be able to complete the land equation and for next fiscal year we can start start working on the construction of the facility.
operator
Thank you sir. Thank you. The next question is on the line of Mumuksh Mandalesa from Anandraathi Institutional Equities.
Mumuksh Mandlesha
Yeah, thank you so much for the opportunity sir. So can you just update what kind of tractor industry growth expected for this year from earlier guidance from mid to high single digit and with the second half particularly the base catching up, will it be still a positive trajectory or do you see it flatten out in the second half, sir?
Bharat Madan
Hi Mooch. So we stick to our earlier guidance of mid to high single digit growth for the entire year. Last year the base was very high. So in H2 the industry growth last year was close to about 15%. So this continuous growth in H2 might not be there. It will actually depend on how the ensuing season performs. So the season this year, the tractor season this year actually starts from August instead of September and hopefully the entire season would be over by the end of October. So post the season an actual picture will emerge on how the industry will actually end for the current physical year.
Mumuksh Mandlesha
Got it sir. And how would this delay inventory now and for this year? What kind of delay expansion plan from the 1600 currently sir?
Bharat Madan
So the dealer inventory is currently between four to five weeks currently for all the brands put together. And yes we have a network expansion plan. So we’re looking at white spaces for all the three brands individually and working on them. So yes, over the next three to four months the dealer counts will also improve significantly primarily in the white spaces.
Mumuksh Mandlesha
Got it sir. How has been the Kubota brand being over last four months and just it can indicate what kind of growth we are seeing there. And how is the profitability of the Kubota business?
Bharat Madan
Yes, so I think overall if you look at the numbers since we got three brands, Powertrain, Foundrek and Kuvota. So in the last few months the Kuota brand has not done well in the south and western market. So we’re seeing some drop which has happened because the product introduction day was delayed. I think the last product introduction they had was about three years ago. So that led to some issues with the channel. So now we have introduced a new product, now upgraded product as well as the new model which will help them in growing the volume.
So we expect at least in the next quarter and going forward the things will start improving for the water brand. I mean as far as margins is concerned, as we mentioned to you, since the localization is still some time away, even though we started working on some of the parameters for certain equipments but the mainly the engine localization is still some time away. Till the time we do that the margins will continue to be under pressure on the quote of random. So but if you look at the margins without quota band, I think we are in line with the historical averages what is called used to have.
Mumuksh Mandlesha
Got it sir. So on the export side, how has the initial response in the new markets like Mexico, Southeast Asia and Africa?
Bharat Madan
These are not the new market for us. We were already exporting to Mexico. So only thing is the change which has happened in the integration of the channel with Kubota network. So earlier we are exporting directly under Foundrecht brand name and we get our own channel. But now we are synergizing the channel and integrating and wherever one of the distributor is strong, whether it’s from formtrack for quota then we are continuing with the same distributor under that brand name. So the markets are already open. So Mexico we are exporting South Africa, Europe, Sri Lanka, all these markets we are already exporting now.
So numbers will start improving I think as we move forward with the new products are coming for export market too which are catering to specific market. So they will see the improvement will happen in the overall numbers. So that is one segment where we see the continuous improvement will be there on the export.
Mumuksh Mandlesha
Got it. And sir, how was the input commodity cost moment for this quarter and what is the outlook for next quarter, sir?
Bharat Madan
See we get the impact of the commodity prices only with the lag of a quarter. So the last quarter was soft. So we saw some deflationary trend. Actually on the comedy side, especially for the factory industry even though the steel price had started moving up. So construction equipment did have some impact. But now this quarter in the Q2 we are seeing the negative impact will be there on tractor margins too. There’s some increase in cost which we’ve seen happening on the metal side, you know, which will likely impact the margin in this quarter. So let’s see.
But it’s nothing significant as of now which we can really see as threatening as we’ve seen in maybe two years ago. So that sort of relation is not. There will be less than 1% in Fitcast.
Mumuksh Mandlesha
Thank you so much for the opportunity.
operator
Thank you. Before we take the next question, we would like to remind participants you may press star and one to ask a question. The next question is from the line of Vipul Agrawal from hsbc. Please go ahead.
Vipul Agrawal
So thank you for taking my question. A couple of questions. First is on the channel expansion. Can you comment on network expansion of Kubota in North India and Escorts in South India and how is it working with existing Escorts and Kubota dealer in the respective regions?
Neeraj Mehra
Hi Vipul, this is Neeraj again. So yes, we’re working on both or rather three brands. Powertrak, Farmtrak and Kubota. So I’ll take a couple of minutes to explain. Powertrak to a very large extent is a pan India brand. We do have white spaces in the south and some states in the eastern part. Kubota and Farmtrak to a very large extent are very regional specific and the focus at the moment is on both these brands to expand the reach. So currently the integration is not there. Full hog. We’re thinking of integrating on how the Kubota dealers and in south can be integrated with either the Power Track or the Farm Track brand and vice versa in the north.
So we have initiated that and working on a pilot on that integration.
Vipul Agrawal
Understood sir. Just like trying to understand what is the marketing strategy for these brands like for Farm Track in south and for Kubota in North India. Because as for my understanding, it is very tough to enter into being practice being a mature, mature industry. It is tough to crack market share of another player in a particular market or I would say in a particular village. That is what my understanding. So what is your marketing strategy for these two brands while you are when you are opening a new dealership or trying to merge your dealership over there.
Neeraj Mehra
So Ritul, your understanding is very right. So the focus is on strengthening our weaker markets not necessary with all the brands put together. So as I have mentioned earlier on to an earlier question, the introduction of new products will strengthen our reach and help us in appointment of dealers in our white spaces. So it’s absolutely not necessary for us for example to appoint Farm Track dealers in the southern part of the country strengthening Kubota dealers. Appointing Kubota dealers as well as Powertrak dealers in south. That’s an example I’m giving will help us grow market share overall for ekl.
So it’s absolutely not mandatory for us. And we’re not thinking of growing all the three brands in the entire country. So depending on the suitability of the product with the application and the past presence of that particular product, we are expanding our channel. Sure.
Vipul Agrawal
Thanks. Thank you. So my Second question is on the discount. So right now like mentioned, first half was the base was low for first half and second half the base is catching up. So how are we seeing discounts from that perspective? Like maybe to arbitrage. Are you saying the industry might go with higher discounts in the kind of to maintain the growth momentum or maybe. And the monsoon has been pretty good. So demand is expected to be to remain quiet only in second half as well. So what’s your view on the discount going forward and any color on current discounts?
Neeraj Mehra
So the discounts are not basis the industry growth or degrowth. These are seasonal. So when the season, the peak seasons come in, customers actually expect discounts and almost all manufacturers going for slightly higher discounts. Our strategy would be to be competitive in the market and if needed the discounts would be there. But the discounts, higher discounts primarily to look at the industry growth or degrowth are not there. It’s primarily season specific discounts are given during the season and then those are those discounts are reduced once the season gets over.
Vipul Agrawal
So my last question is on the farm implements. How are you seeing the penetration going over there? It has been slower than expected. What we were talking about like five years back, seven years back. It’s far slower than what we expected. So how do you see automation happening in the implement side of the agriculture business? That’s my last question.
Bharat Madan
I think the long term trend obviously is this what we are seeing will really follow what you’ve seen in the developed countries. So gradually the things should start, you know, looking up there. In fact, if you look at our number also like I said in the form segment in agri machinery also significant portion really comes from the form equipment. Now for us after this merger of water JVs, so obviously like you mentioned, silt is only about, you know, 20% of the total industry by value for the tractor industry, which is represented by form equipment and most of it is still with the smaller non OEM players, you know, who dominate this industry.
So I think for the OEMs to come into play with a large number, I think still it’s going to take some time. We’ve not really seen a major change happening there in the last few years, but we expect the long term trend will be there only. Obviously it has to follow a lot of other reforms from the government side on the land and labor. So that still do happen. So once your farm reforms happen, then maybe the land consolidation will become digitalization will improve. That will lead to your demand for the farm equipment too. So I think in the short term we don’t see that happening with the way the government discretes and the last return was done by the government which is not very successful.
So hopefully in the long run I think these reforms will happen which can lead to demonic.
Vipul Agrawal
Thank you sir, thanks a lot for the answer.
operator
Thank you. The next question is from the line of Ahmed Hiranandani from Philip Capital. Please go ahead.
Amit Hiranandani
Thanks for the opportunity. So first of all congrats for the good margin performance. So my question is basically from the previous participant on the farm implements thing. So at present are we outsourcing this or we are making it in house?
Bharat Madan
No, we are only buying it from third party. So the large part is actually imported from Kubota with the harvesters and transplanters we are importing from Kubota, Thailand and Japan and China. So the only the implement part, the rotovators etc. That we are sourcing locally, the bonus players, baler, etc. They are all being sourced locally. So the third party arrangement we’re not making anything in house right now.
Amit Hiranandani
Right. And just if you can help us with the annual revenue number for this.
Bharat Madan
Farm implements I think last year was about 600 odd crores so we expect the number will be probably growing this year. We’re seeing a good growth coming in from the back of this harvesters, mooses and any storage markets.
Amit Hiranandani
Right. And my second question is on the construction equipment business. Just a clarification, please correct me. So this time we have sold old emission stocks at lower rates, right?
Bharat Madan
No. So all manufacturers since the emission arm came into play from 1st of January this year. So most of the manufacturers were carrying bulk inventory from last year from the last calendar year. So they had built inventory in anticipation till 31st December. So the major production actually happened in those, you know, period. And in this period of January to June the production volumes have been quite low for the new emission inventory. So most of the manufacturers have been liquidating the old emission because of that overhead. So absorption has been very low on this lower production.
So that’s the reason this has impacted the margin. And also the 30th of June was the last date for liquidating most of this inventory. So which is also some other reason for impacting the margin in this quarter. But we expect, I think once the demand picks up going forward from next quarter volumes will start improving both on production and sales plan.
Amit Hiranandani
Right, right. And on the construction equipment margin any steps we are taking to bring back the ebit margin to 10, 11% range.
Bharat Madan
So I Think on a full year basis we should be in same margin level I think what we had last year even though this quarter like I said since this was a temporary impact of cut down on the production and also liquidation of inventory the impact came I think the second half normally the demand is good for the construction equipment space so we expect we should be back with the similar margin in the second half of this year, Right?
Amit Hiranandani
Answer. My second clarification is on the other income so increase in other income was largely due to the M2M gains, right?
Bharat Madan
So it’s a mix of two elements one, the overall trading surplus has increased because of this money flowing in from the sale of railway business so we got those funds so this is a higher corpus we had so that also led to the increase in other income and second obviously was the mark to market improvement because the interest rate cuts which RBA did so the impact of both combined is reflected in the other income.
Amit Hiranandani
What is the capex outlook for this fiscal?
Bharat Madan
So like we mentioned last time also it’s still in the range of 350 to 400 crores which is the organic one other than the investment which will do for the acquisition of line for Greenfield.
Amit Hiranandani
This is this last question if I can stretch in Presently your current dealer count is 1600, right? And can you give a breakup based on zone wise east, west, north and south?
Bharat Madan
So we don’t have the ready number but we can ask the investor relation team they will share it with you the reason why it’s like.
Amit Hiranandani
Thank you sir, all the best. Thank you so much.
operator
Thank you the next question is from the line of Mitul Shah from Dam Capital.
Mitul Shah
Yes sir thank you for the opportunity and congratulations on a very strong operating performance and my apology for outside disturbances I’m traveling so my first question is on market share for this despite launching new products of course a very initial state our market share continue to slide so is it related to the market competition or anything to do with the inventory correction? And similarly inventory is now also as indicated by mirror around four and half week compared to industry inventory would be somewhere 47, 48 days so we are much better off. So now onwards where do you see market share bottoming out?
Neeraj Mehra
Hi Mithul. Neeraj, is this right? So you spoken of the product introductions so the product introduction happened in the fourth quarter of which was the Pro Max series and as I mentioned in my earlier comments contract market share is gradually we have Pro Max.
operator
Sorry Tosha, I would like to request you to please mute your handset while the management is answering.
Neeraj Mehra
Thank you. As regards to Kubota and Power Track, there is no as such new product introduced in the past. This month only we have introduced Kubota, the 42hp series and certain changes in the higher HP ones. And as mentioned earlier, the Wetline series is planned for introduction in September and early October. So the results of that we will actually see coming in from quarter four as well as in the next year. As regards to the market share, yes, the market share has to a certain extent declined. Apart from various other factors, one of the key reasons is the industry swing.
The industry swing has actually impacted severely the market share of ekl. The contribution of the EKL stronger markets to a very large extent has come down by about 5, 6% which has actually impacted the market share. But having said that, I think this, this swing of the industry should taper down in the coming months because the industry growth started happening from September last year onwards and we should see definitely see improvement and a growth in market share in the ensuing quarters.
Mitul Shah
As you said rightly, last year, September onwards industry started growing and particularly from October onwards it was a very high growth from south and west. So now October onwards probably this disparity between south and other region or west and other regions may not be there. So that is also quite positive as we have also we got impacted because of the regional disparity in growth. So right, considering that second half, how one should look at compared to first half for the industry in terms of the as we know it would be like led to marginal growth.
But disparity wise, what is your view on the regional growth, sir?
Neeraj Mehra
So see you rightly said Mithul, because H2 last year was a 15% growth. So this year it will probably be a very marginal single digit growth or it might even remain at par. So if it remains at par also we are looking at a 4,5% growth for the entire year. So I think this disparity to a very large extent should tone down starting September and October. What has actually happened is now the industry because of certain subsidies and other things have started growing substantially in the eastern part of the country. So that is another concern for us, but we are working on that.
But I think this disparity which is continuing for the past 10 or 11 months now should subside as we enter into September and October.
Mitul Shah
Last question on construction equipment side, as you highlighted there was a inventory correction because of this emission norm and our production and dispatches were lower in terms of wholesale. So can you give roughly ballpark number between retail versus wholesale for the quarter for us or for industry. And where do you see that Q1, Q improvement for construction equipment in Q2 and Q3? That’s the last question.
Sanjeev Bajaj
Thanks. Yeah. Hi Sanjeevaj decide. So for our business largely it is retail backed business. So our numbers on wholesale and retail do not differ much. And our channel inventory is also less than 30 days normally. And we try to always maintain that it could be occasionally just start of the season, dealers might take a few machines extra. But generally we try to maintain that in the 20 to 25 days kind of an inventory for the dealers. So for our retail numbers are similar to our billing number. Last year also full year it was neck to neck.
And this year also we want to maintain it that way only. Thanks sir.
operator
Thank you. The next question is from the line of Gunjan from Bank of America. Go ahead.
Gunjan Prithyani
Hi, thanks for taking my question. Just couple of follow ups on the export side. I do read, you know, some of the European markets stepping up now. So you know, can you just talk about the opportunity there? You know, what is it that we trying to do along with Kubota in the European markets?
Bharat Madan
As we mentioned, most of our exports is happening to European market only. And there we’re seeing a good order inflow, you know, coming in from Kubota network. So we expect the numbers should keep improving in a month, on month as we enter those markets.
Gunjan Prithyani
Okay, okay, got it. And maybe, you know, I, when I look at the export business, I think there were two or three parts to it. One was like we’ll continue to grow on the, you know, the emerging markets or Mexico, etc. Which you were already working on. And then when Kubota comes in, US and Europe were going to be the largest markets. Now if you were to just like sort of lay the opportunity, I know a lot of it will unfold over a period of time when the engine plant comes, etc. But what is really the, the sort of, you know, three, three to four year target that we’re looking at on the exports right now? I mean I understand that engine plan needs to commission, but any broad, broad, you know, targets around that.
Bharat Madan
So as I mentioned, our midterm plan was to take the exports to software around 15% of our total revenue. So obviously in export license is also better. But industrial opportunity today last year we did about 5,500 tractors and this year is looking at 25, 30% increase. I think we expect the similar numbers of growth will continue in the next three, four years. So the opportunity will continue to be there and there’s a plan from Kubota side also to make India a production base for certain products. Obviously that will materialize only when your greenfield facility gets set up.
So there’s still some time away. But I think in the long term we expect the number will continue to look better and it can anyway be 20 to 30,000 factors in the long run.
Gunjan Prithyani
Okay, got it. And on the component side there’s this mention of warehousing which is already begun in India for the Kubota global supply chain. Can you share more on this? Like what is it the revenue contribution if at all coming in last year or this quarter? Quarter. And how should we think about that ramp up? Coming through. On the, on the supply chain servicing from India.
Bharat Madan
I think last year was close to 100, 150 crores of revenue and this year we’re looking at about 250 crores of revenue coming from component exports. So I think still it’s a work in process. So I think we are still working on developing more vendor base who can cater to, you know, this business. But as of now the development is slow because like I said on the margin side the major change will happen once your localization happens. Because just by doing a trading activity through vendors will not really give that sort of margin. So that’s where the major push has not been there so far.
But obviously the parallel team is working on developing the vendor base and the numbers will again keep improving year on year.
Gunjan Prithyani
Okay, so on this I assume there is not much margin at the moment.
Bharat Madan
This is essentially a pass through mechanism. Right now is sourcing for vendors and just trading in and supplying to Kubota. So unless we start making certain component which is a plan where the margins will be better and comparable to the normal margins, you know, which will have to an unrelated entity. So that still I think it will take some time. We are doing some manufacturing locally right now, but it’s not much.
Gunjan Prithyani
Okay, got it. And last question. Trem 5 Any update? Because now we are getting closer to the timelines for implementation. Right. So what’s the conversation? What are we expecting on the, on the regulation to come through?
Bharat Madan
I think from the Tractor Manufacture association side they had a meeting with the Ministry of Road and Transport and they already given their proposal. So I think the proposal given was that 25-50hp segment there should not be any change in the emission norm immediately. And on the balance segment they can still explore, you know, if they can do those changes and move to trend 5. The issue is the MESHI had indicated they will come up with the final decision on this, maybe in this month. They’re expecting middle of this month actually. So once you get a clarity on that, maybe we’ll have a better picture with us.
But chances are 25-50hp may get exempted or differ.
Gunjan Prithyani
Okay. I mean those are the sort of conversations, I mean government is open to deferring it out. Is your. Is the industry understanding right?
Bharat Madan
Yeah, that is right.
Gunjan Prithyani
Okay, got it. Thank you. I’ll join back with you.
operator
Thank you. The next question is from the line of Vaishnavi from Craving Alpha Wealth Fund. Please go ahead.
Vaishnavi
Thank you for the opportunity again. Sir, I have two for questions. First one was the quarter last quarter as 70% of export was routed through the delta market. However, this quarter as you mentioned, it was 52%. Is there any change that you can mention?
Bharat Madan
It depends on the order inflows because we also have been exporting to other markets where quota network is not existing because they were our earlier distributors which we continue to export. So it all depends on the network and the order intake you get from various countries. So it can vary but the larger part is still going to the quota network.
Vaishnavi
Second question was on sales year of year. If you can give us a target that you are planning to achieve for FY26.
Bharat Madan
Sorry, can you repeat your question? It was not very clear.
Gunjan Prithyani
Am I audible, sir?
Bharat Madan
Yes, please.
operator
Yes, please go ahead.
Vaishnavi
So my question was regarding the sales force year on year which we are planning or targeting to achieve by FY26.
Neeraj Mehra
So Vaishnavi, currently our volumes with respect to last year are more or less at par. So the, the thought is that in the coming months we will actually grow in line with the industry or outgrow the industry marginally, depending on how the industry performs from a regional perspective. So the intent is for the financial year 26, we end at a higher volume growth with respect to last year.
operator
Okay. Thank you sir. Thank you. The next question is from the line of Vishakha Maliwal from ICICI Securities. Hi.
Vishakha Maliwal
Hi. Thanks for taking question. Maybe partly repetitive but regarding the medium. Term 15% target for export, are there. Any specific initiatives that are taking for this?
Bharat Madan
Yeah, so as we mentioned, I think there are both. There are multiple layers which we are deploying now. One obviously is the export of the finished products which, which we are doing from India. As we mentioned, the numbers of export to Kubota is continuously increasing and that will continue to happen in future. Two, the second as we talked about is the component sourcing from India, you know, which is also Daily getting increased as the vendor based established there. And third is the service export which we’ll be doing, you know, which essentially is setting up the shared services for them in India both for R and D as well as for ID services.
They are also the work has started and already the billing has started. So there also we see a good opportunity in the next four to five years the numbers will improve. So all these will lead to, you know, going back to the number what we talked about, you know, it’s about 15% of top line which is the target which we intend to achieve. A combination of these.
Vishakha Maliwal
Thank you sir.
operator
Thank you. Ladies and gentlemen, the next question is from the line of Gunjan bank of America. Please go ahead.
Gunjan Prithyani
Hi, thanks for taking my question again. I just had a clarification that you now mentioned that 20% of your agri machinery revenues are non tractor. Right. Is it possible to get a rough breakup of what is it from let’s say engine implements, spares. Just rough idea would help because I think these are all revenue lines which are growing faster. I would think.
Bharat Madan
The largest one is the spray part spares and lubricants which is the largest part there. Then the agri solution. This is form equipment and the engine is still the smaller part. So all these three are the combined.
Gunjan Prithyani
This is pairs would be what 10, 12%?
Bharat Madan
Yeah, roughly 10%.
Gunjan Prithyani
Okay. And engine would be low single digit.
Bharat Madan
Yeah, engine is still low industrial numbers. We not very idea. So I think last year we did about 20,000 engines and probably similar last year there was a change of emission norms. A lot of pre buying happened in the first quarter last year. So this year post emission norm changes the demand slightly slowed down because the cost increases. So but yes, it will remain in the similar range this year.
Gunjan Prithyani
And the spares would. I mean I’m just trying to understand spares would grow in sync with how the tractor business is growing. Implements is where the growth outlook is strong given we’re adding new products from Kubota’s help. And engine is there is this something which is sizable or you know is this is external? I mean who is the customer base here?
Bharat Madan
So in India there are two segments. One is the power segment. You know these engines are used for generators. So the OEMs who make generators, they use our engineers for making those gensets. The second segment is the OEM segment. So like you know quota is the largest supplier of engines to the industrial equipment sector. So. So there’s a segment, you know where they use engines of Kubota in India and Also of escorts, you know in certain construction equipment, machinery, OEMs, you know we use those engines. So both these segments you all almost, you know I’ll say 50, 50 today.
Gunjan Prithyani
Okay, got it. Thank you so much.
Bharat Madan
Marin is another one. So in Marin also like for powering those power boards so the Indian get used. So Marin is another category, you know where the Indians go.
Gunjan Prithyani
Okay, got it. Thank you.
operator
Thank you. A reminder to participants, if you wish to ask a question you may press star and one on your touchstone phone. The next question is from the line of Amit Goel from Rare Enterprise. Please go ahead.
Amit Goela
Yeah, Bharat. Hi Bharat. You may have answered this question earlier but I was just wondering one thing. I was going through the presentation. You have 1600 dealers now with Kubota also coming in so soon. Your access to the southern markets and all gets slightly better so that we can you can have your market share improves now the new products and everything in place.
Neeraj Mehra
So. Hi Amitji, this is neeraj mehra du side. So yes, you’re very right. With the 1600 dealers in place the our volume should will actually earlier comments. We are introducing a south special series in power track in the last week of September or early October. So that should actually help. PowerTrak Currently in the PowerTrack and FarmTrack sales, the product range suitable for Padi applications was an issue. With this range coming in and with substantial number of dealers being there, we should see the volumes and market share growing.
Amit Goela
Okay. Okay. Thank you so much and all the very best.
Neeraj Mehra
Thank you.
operator
Thank you ladies and gentlemen. That was the last question for today. I now hand over the conference to Mr. Pratik Singhal for closing comments. Thank you.
Prateek Singhal
Thank you ladies and gentlemen for being present on this call. For any feedback or queries, please feel free to write us to us@investor.relationscourse cobota.com thank you very much and have a good evening.
operator
Thank you. Thank you. On behalf of ICICI Securities Limited concludes this conference. Thank you for joining us. And you may now disconnect your lines.