East India Securitie's report on Swaraj Engines
Swaraj Engines (SWE) reported strong volume growth in Q4FY21, ahead of estimates, in-line with good show of overall tractor industry. Based on our recent survey, we believe Swaraj tractors continue to enjoy strong brand equity. The company reported revenues of Rs 3,049mn in Q4FY21, a growth of 74.1% YoY (up 11.9% QoQ), above our estimates. Volumes grew by 62.4% YoY to 33,831 units and blended realisation was higher by 7.2% to Rs 90,127 per unit. Good crop prices and expected normal monsoon should help the demand, but the high FY21 base will restrict the growth in prevailing uncertain economic situation.
Outlook
The company has maintained its track record of rewarding shareholders and declared a handsome dividend of Rs 69 per share for FY21. Considering sound fundamentals of SWE, we maintain our Buy rating on the stock with target price to Rs 1,669 (18.5xFY23e EPS).
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