Buy Swaraj Engines, target Rs 2,426: Jayant Manglik

Jayant Manglik

Swaraj Engines is engaged in manufacturing of engines for fitment into M&M’s "Swaraj" tractors. It derives ~97 percent revenues from sale of tractor engines.

The domestic tractor industry has witnessed a significant turnaround over the past two years, helped by two successive years of normal monsoon. This is well reflected in SEL’s strong financial performance in FY17 & FY18.

Going forward, in its initial forecast, IMD has predicted normal monsoon in 2018 as well. This would keep the demand for tractors buoyant and result in healthy volume offtake for SEL.

We expect SEL’s net revenue and PAT to grow by 15 percent and 16 percent CAGR over FY18-20E, likely to be driven by good monsoon & new launches.

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