Mahindra Mahindra Escorts Kubota revise FY27 tractor industry volume outlook to flat

New Delhi, Nov 5 (PTI) Major tractor makers Mahindra & Mahindra and Escorts Kubota have lowered their forecast for the domestic tractor industry volume to nearly flat in the current financial year.

     This comes on the back of a high base, uneven monsoon and weak demand in key markets such as Maharashtra and Karnataka.

     Market leader M&M has revised its forecast for tractor industry growth in financial year 2027 to flat from an earlier estimate of 5 per cent, while Escorts Kubota expects the market to remain flattish or record a low single-digit decline during the year.

     The domestic tractor industry sold around 11.6 lakh units in the financial year 2026, registering growth of 23.47 per cent. The industry had initially been expecting mid-single-digit growth in the current financial year.

     Speaking to reporters after the company's second-quarter results, M&M Executive Director and CEO for Auto and Farm Sector Rajesh Jejurikar said the monsoon deficit widened, and reservoir levels deteriorated between July and Oct, which has prompted the company to revise its outlook.

     "We are revising our industry outlook. We had been staying with a 5 per cent industry outlook up until now. We are revising that to be flattish," Jejurikar said.

     You can see that there is a significant deterioration in rainfall. The reservoir levels are much worse than what we would have thought it to be. So, we believe these are two strong driving factors which make us revise our forecast from plus 5 per cent to flattish for the full year.

     He also pointed to higher input costs for farmers and drought conditions in Maharashtra and Karnataka, both important tractor markets.

     However, Jejurikar said northern markets are performing better than Maharashtra and Karnataka, with Uttar Pradesh remaining strong and Madhya Pradesh showing signs of improvement.

     The Northern markets are doing well.

     They have not seen the kind of drop that Maharashtra and Karnataka have seen, and of course everyone is trying to compensate for that by focusing on markets which are growing well, he said.

     He also said the high base of the previous year is weighing on the industry's growth prospects.

     Tractor industry volumes had grown around 25 per cent in the second half of the previous financial year, making year-on-year comparisons more challenging.

     Separately, Escorts Kubota CFO Bharat Madan told PTI that the full-year industry performance is expected to be broadly flat or slightly negative.

     In the first 6 months, we have seen the industry grow about 8 per cent in volume. But September has gone down by about 16 per cent in volume terms, Madan said. He expects demand to remain under pressure in the coming quarters.

     So Q3, Q4 we expect the pressure will be there, he said, adding that the industry could decline 10-12 per cent in the third quarter, followed by a 7-8 per cent drop likely in the fourth quarter. So overall for the full year we expect the industry to be flat to maybe low single-digit degrowth, he said.

     He sees Maharashtra as the biggest drag on the industry's performance, saying volumes in the state have fallen sharply. Excluding Maharashtra, the industry would be slightly positive, he said.

     Madan also pointed to water scarcity in paddy-growing states, including Telangana and Karnataka. He expects a recovery to begin from the second quarter of the next financial year, provided the country receives normal monsoon rainfall.

(This story has not been edited by THE WEEK and is auto-generated from PTI)