Q4FY21 Company Update - Swaraj Engines - ICICI Direct

Swaraj Engines (SEL) reported a robust performance in Q4FY21, primarily tracking healthy wholesale tractors volume and likely inventory restocking at its key client M&M. Engine sales volume for Q4FY21 came in at 33,831 units, up 62% YoY, 8% QoQ. Sales volume for FY21 came in at an all-time high of 113,269 units, up 26% YoY amid ~20% volume growth in the tractor segment for FY21. Net sales in Q4FY21 were at Rs. 305 crore with EBITDA at Rs. 46.2 crore and corresponding EBITDA margins at 15.1%, up 170 bps QoQ. Margins for the quarter were supported by improvement in gross margins as well as operating leverage benefits. PAT in Q4FY21 was at Rs. 32.6 crore, up 106% YoY, 30% QoQ. SEL announced a total dividend of Rs. 69/share for FY21, implying dividend payout of ~90%, with EPS for FY21 at Rs. 76.2/share.

Valuation & Outlook

We maintain our positive stance on SEL amid a highly capital efficient business model, robust cash flow generation and overall positive farm sentiments domestically. Building in ~13/10% sales/PAT CAGR in FY21-23E we retain BUY valuing it at Rs. 1650 i.e. 18x P/E on FY23E (earlier TP Rs. 1710).

Shares of SWARAJ ENGINES LTD. was last trading in BSE at Rs.1371.05 as compared to the previous close of Rs. 1364.55. The total number of shares traded during the day was 1251 in over 286 trades.

The stock hit an intraday high of Rs. 1394 and intraday low of 1338.45. The net turnover during the day was Rs. 1715049.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_SwarajEngines_CoUpdate_Apr21.pdf

Source : Equity Bulls

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