Escorts Kubota Limited has received a major relief from tax authorities as the State Tax Officer, Mandaveli Assessment Circle, Chennai, Tamil Nadu has dropped substantial GST demands against the company. The development marks the resolution of a prolonged tax dispute that had been ongoing since 2025.

Tax Demand Details

The State Tax Officer issued multiple orders dated January 29 & 30, 2026, dropping tax demands worth ₹299.24 crores along with associated interest and penalty. The demands covered a four-year period spanning Financial Years 2020-21 to 2023-24.

Company's Contest Grounds

Escorts Kubota had contested the original tax demands raised through Show Cause Notices on two primary grounds. The company argued against the wrong classification of agricultural tractors as road tractors, which would have different tax implications under GST regulations. Additionally, the company challenged the computation methodology, specifically the wrong calculation of alleged taxes on total GST turnover instead of limiting it to tractor turnover only.

Regulatory Compliance

The company has maintained transparency throughout the process by providing regular updates to stock exchanges. Previous intimations were filed on May 08, 2025 and December 30, 2025 under Regulation 30 of SEBI Listing Regulations. The latest disclosure follows the same regulatory framework, ensuring investors remain informed about material developments.

Timeline and Documentation

The company received the first order from the State Tax Officer on January 29, 2026 at 06:34 P.M. IST. The formal disclosure to stock exchanges was made on January 30, 2026, demonstrating prompt compliance with listing obligations. The resolution comes after the company filed written objections before the State Tax Officer rather than pursuing litigation in courts or tribunals.

This favorable outcome provides significant financial relief to Escorts Kubota Limited and removes a substantial contingent liability from the company's books. The resolution demonstrates the effectiveness of the company's tax strategy and its ability to successfully contest disputed demands through proper legal channels.

Escorts Kubota shares experienced a decline of 2.30% to ₹3,471.70 during Friday's trading session, despite the company showcasing strong financial fundamentals. The stock, which is a constituent of the Nifty Midcap 150 index, faced bearish sentiment according to market analysis.

Strong Annual Financial Performance

The company delivered impressive annual results for FY25, demonstrating consistent growth across key financial metrics. Revenue growth has been particularly noteworthy, with the company maintaining an upward trajectory over the past five years.

The annual revenue for FY25 reached ₹10,243.88 crores, representing a 15.75% increase from FY24's ₹8,849.62 crores. Net profit also showed positive momentum, rising to ₹1,125.17 crores in FY25 from ₹1,032.71 crores in the previous year, marking an 8.95% growth.

Quarterly Performance Analysis

The quarterly results reveal interesting patterns in the company's performance throughout FY25. A notable spike in net profit occurred during the June 2025 quarter, which significantly impacted the overall annual performance.

The June 2025 quarter stood out with exceptional net profit of ₹1,397.10 crores, significantly higher than other quarters which maintained relatively consistent profit levels around ₹318-324 crores.

Financial Health and Operational Metrics

Escorts Kubota maintains a strong balance sheet with zero debt-to-equity ratio across all reported years, indicating prudent financial management. The company's operational efficiency is reflected in various key metrics for FY25.

The company generated ₹1,003 crores from operating activities in FY25, maintaining healthy cash flow generation capabilities.

Dividend Distribution

Escorts Kubota continued its consistent dividend policy in FY25, rewarding shareholders with substantial returns. The company announced a final dividend of ₹18 per share (180%) with an effective date of July 04, 2025, and an interim dividend of ₹10 per share (100%) with an effective date of February 14, 2025. The total dividend per share for FY25 amounted to ₹28.00, compared to ₹18.00 in FY24.

Market Performance

Despite the strong financial performance, market sentiment remained bearish on the stock according to analysis from January 16, 2026. The 2.30% decline to ₹3,471.70 reflects short-term market dynamics that may not necessarily align with the company's fundamental performance. The stock continues to be part of the Nifty Midcap 150 index, indicating its significance in the mid-cap segment.