Swaraj Engines Ltd. share price target

Swaraj Engines Ltd's (SEL) Q3FY18 numbers were in-line with our estimates with net revenue and PAT growth of 18.4% & 12.6% YoY respectively. A contraction of 85bps in EBITDA margins (at 14%) was slightly disappointing, impacted by higher operating expenses and material cost.

Swaraj Engines (SEL) reported a robust Q3FY18 performance backed by healthy tractor sales at parent company i.e. M&M; (Swaraj division) SEL recorded engine sales of 21,971 units in Q3FY18, up 14.7% YoY, outperforming M&M; tractor sales growth of 6.4% YoY Consequently, total operating income in Q3FY18 came in at | 183.3 crore (up 18.4% YoY). EBITDA for the quarter came in at | 25.7 crore with corresponding EBITDA margins at 14% (down 80 bps YoY) EBITDA margins came in muted primarily tracking one-time expense...

We recommend BUY with a TP of 2554 (30x Dec FY19E EPS). Swaraj Engines Ltd (SEL) reported good revenue growth of 18.4% YoY for 3QFY18 at Rs 1.83bn. The performance was largely driven by 14.7% YoY engine volume growth to 21,971 units and realization growth of 3.2% YoY to Rs 83,410. EBITDA grew by 11.7% YoY at Rs 257mn and EBITDAM stood at 14.0% (-85bps YoY), was largely due to drop in gross margins by 100 bps YoY and higher other expenditure which might be a one of expenditure. APAT grew by 12.6% YoY at Rs 172mn.

At CMP of Rs 1,966, SEL trades at 28.0/25.3/22.3x FY18/FY19/20E EPS. Our fair value for the stock is Rs 2,489 (30x Sept - 19E EPS). We recently interacted with management of Swaraj Engines Ltd (SEL). The company manufactures and supplies diesel engines in the range of 20 HP to 60 HP to Swaraj Tractors, owned by Mahindra & Mahindra (M&M;). SEL is a joint holding of Kirloskar Industries (17.4% stake) and M&M; (33.2% stake).

Swaraj Engines Ltd (SEL) reported in-line numbers for Q2FY18 with net revenue and PAT growth of 16.6% & 22.1% YoY respectively. EBITDA margins improved by 51bps YoY to 16.8%.

On the back of impressive growth in the India tractor industry, Swaraj Engines (SWE) reported its best ever quarter in terms of engine sales volume and net profits. But considering strong growth reported by M&M;'s tractor division, this performance was below estimates. 2QFY18 EBITDA/PAT improved 20.3%/22.1% YoY, on the back of 11.6% growth in volumes and 51 bps YoY improvement in EBITDA margin. SWE's EBITDA margin was slightly ahead of our expectations, however sales and net profits missed estimates. While we acknowledge that SWE is poised to leverage the continued good growth in tractor volumes, current reach valuations limit the upside in the near...

ICICI Securities Ltd | Retail Equity Research Swaraj Engines (SEL) reported a steady Q2FY18 performance with the company reporting new high EBITDA margins of 16.8% Engine sales for the quarter came in at 24984 units, up 11.6% YoY with consequent net sales at | 208.9 crore, up 16.7% YoY Engine sales for the quarter, as a percentage of tractor sales at parent i.e. M&M;, were at a normalised level of 32.4% EBITDA in Q2FY18 was at | 35.1 crore (EBITDA margins at 16.8%, up...

Swaraj Engines Ltd (SEL) reported broadly in-line numbers for Q1FY18 with net revenue and PAT growth of 13% & 13.2% YoY respectively. EBITDA margins improved marginally by 11bps YoY at 16.6%.

ICICI Securities Ltd | Retail Equity Research Swaraj Engines (SEL) reported a steady Q1FY18 performance with key surprise being sustenance of EBITDA margins at 16%+ levels Engine sales for the quarter came in at 23287, up 11.4% YoY with consequent net sales at | 194 crore, up 13.0% YoY Engine sales for the quarter lagged tractor sales at parent company i.e. M&M; due to build-up of inventory in the previous quarter EBITDA in Q1FY18 was at | 32.3 crore (EBITDA margins at 16.6%, up...