Buy Swaraj Engines; target of Rs 2500: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Swaraj Engines

Swaraj Engines (SEL) is a leading manufacturer of engines supplying to the Swaraj brand of tractors under parent group M&M It predominantly supplies engines in the 20-50 hp tractor segment It is a direct beneficiary of robust tractor sales domestically with Swaraj brand tractor commanding a promising 17% market share as of FY17, up from 12% as of FY12 (up 500 bps over five years) With parent M&M reporting 44% growth in domestic tractor sales in Q4FY18 we expect this robust performance to percolate down to SEL With the government’s focus on augmenting farm income through increase in MSP, early indications of normal & widespread monsoon 2018, infrastructure activity on the uptick (employs 30% of tractor) and incremental capacity expansion under execution (105 KT to 120 KT), we believe SEL is the most efficient play on agriculture theme domestically with robust sales & PAT prospects, going forward SEL has successfully completed the buyback programme wherein it bought 2.95 lakh shares @2400/share, total spend of Rs 71 crore.

Outlook
We expect sales, PAT to grow at a CAGR of 15.4%, 15.9%, respectively, in FY17-20E.  We value SEL at Rs 2500 i.e. 30x P/E on FY19E & FY20E average EPS of Rs 84 with a BUY recommendation on the stock.
For all recommendations report, click here

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