ICICIdirect has recommended 'Sell' on Escorts with target price of Rs 103 as against current market price (CMP) of Rs 134 in its report.

Commenting on the investment rationale, the broking firm said, "Escorts reported revenues of Rs 9.83 billion, 2% YoY (over Q2FY14) and 15% QoQ decline despite tractor volumes, which came at 15,500 units climbing 5% YoY.

Margins at 4.7% came lower by 75 bps QoQ and 150 bps YoY as other segments continued to remain under pressure. Consequently, PAT came at Rs 318 million, lower by 15% YoY and down 30% QoQ

For Escorts, the financial year is an 18-month one as Escorts changes its financial reporting year from September ending to March ending. We have been increasingly focusing on capital allocation vs. return on capital allocated by companies. In the last six years, Escorts has had an average cost of debt at 19%, which considering the low D/E profile is surprising. We, thus, feel both industry wise/stock specific it does not yet warrant an upgrade. Also, the earnings consistency is highly doubtful."

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