ICICI Direct's research report on Swaraj Engines
Swaraj Engines (SEL) is involved in manufacturing diesel engines for M&M’s Swaraj brand of tractors. It is headquartered at Mohali (Punjab). Steady ~10% compounding of revenues, EBITDA, PAT over past five years • Net cash positive b/s; consistent cash flow generation; highly capital efficient player with history of >30% return ratios & high dividend pay-outs.
We maintain HOLD rating tracking muted growth prospects in tractor space on high base of FY21 amid high dividend payout & resulting yields (~5%). Rolling over our valuations to FY24E, we now value SEL at Rs 1,680 i.e. 15x P/E on FY24E EPS of ~Rs112/share (earlier target price Rs 1,720).
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