Swaraj Engines - Q2FY21 Company Update - ICICI Securities

Swaraj Engines (SEL) reported healthy Q2FY21 numbers amid record quarterly volumes (34,489 engines, up 31.3% YoY). Net revenues rose 31.2% YoY (entirely volume led, ASPs flat) to Rs. 292 crore, tracking a strong quarter for the domestic tractor industry. Margins rose 20 bps YoY to 13.7% courtesy savings in employee & other expenses with consequent PAT up 7% YoY to Rs. 27 crore. SEL would be expanding capacities by 15,000 units per annum to 1.5 lakh units per annum, to be funded by internal accruals.

Valuation & Outlook

We expect FY20-23E sales, PAT CAGR at 8.2%, 9.0%, respectively. SEL provides an auxiliary play on domestic tractor industry (rural economy) as well as M&M. Its strong B/S, ~70%+ dividend payout & healthy capital efficiency merit continued premium valuations, in our view. We value SEL at Rs. 1,710 i.e. 24x P/E on FY22E & FY23E average EPS (Rs. 71.2) & retain BUY.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_SwarajEngines_CoUpdate_Oct20.pdf

Shares of SWARAJ ENGINES LTD. was last trading in BSE at Rs.1385 as compared to the previous close of Rs. 1417.4. The total number of shares traded during the day was 725 in over 187 trades.

The stock hit an intraday high of Rs. 1414.75 and intraday low of 1385. The net turnover during the day was Rs. 1011749.

Source : Equity Bulls

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