ICICI Direct's research report on Swaraj Engines
Swaraj Engines reported a revenue decline of 8.5% YoY to Rs 175.1 crore due to pressure in both volumes and realisation. Volumes fell 4.3% YoY to 20827 engines while realisation was at Rs 84,088/engine (-2.4% YoY). On an annual basis, the company sold around 89,928 engines (-9.7% YoY) at an average realisation of Rs 85,991 (-1.7% YoY). Change in the product mix led to lower OPM YoY but curb in employee cost during the quarter improved OPM QoQ. EBITDA margins for the quarter were at 13.4% (-90 bps YoY, +180 bps YoY) resulting in absolute EBITDA of Rs 23.4 crore (-14.6% YoY, +18.8% QoQ). Lower taxes (26.1% vs. 35.4% in Q4FY19) negated poor operational impact on bottomline, which was at Rs 15.8 crore (-4.9% YoY, +22.5% QoQ).
Outlook
We introduce FY22E and value the company at 19x FY22E PER to arrive at a target price of Rs 1235. We have a BUY rating on the stock.
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