Swaraj Engines – A Good Medium Term Investment

Expansion Of Tractor Capacity

Expansion Of Capacity
Expansion Of Capacity | Source
Expansion Of Capacity
Expansion Of Capacity | Source
Short Term Gains Are Possible
Short Term Gains Are Possible | Source

Swaraj Engines - Latest Results

(in Cr.)
Dec-11
Sep-11
FY10-11
Revenue
117.58
102.89
360.63
Net Profit
14.08
11.78
43.91
EPS
11.34
9.49
35.35
Cash EPS
12.16
10.27
38.95
OPM %
16.42
15.6
17.49
NPM %
11.97
11.45
12.18
Swaraj Engines - Latest Results

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Is acquiring the shares of Swaraj Engines worth at the current price of Rs.395?

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Swaraj Engines Share Price Movement

 
 
 
Weekly H/L
399.95
386.05
Monthly H/L
465
382.5
52 Weeks H/L
503.7
349
 
( 26 Apr 11 )
( 21 Dec 11 )
Delivery / Var+ELM %
97.51
12.5
Swaraj Engines Share Price Movement

Current Market Price Rs.395


Good Results

Swaraj Engines has produced good results for the quarter ended 31.12.11 as compared to the previous quarter ended 30.09.11. Revenue has increased from Rs.102.89 crore to Rs.117.58 crore. Revenue for the whole year 2010-11 was at Rs.360.63 crore. Net profit increased from Rs.11.78 crore to Rs.14.08 crore. Net profit for the whole year 2010-11 was at Rs.43.91 crore. EPS increased from Rs.9.49 to Rs.11.34. EPS for the year 2010-11 was at Rs.35.35. Cash EPS increased from Rs.10.27 to Rs.12.16. Cash EPS for the year 2010-11 was at Rs.38.95 operating profit margin increased from 15.6% to 16.42%. Net profit margin increased from 11.45% to 11.97%.

Current Market Price Rs.395

The shares of Swaraj Engines are traded in the bourses at Rs.395 now (NSE 18.04.12). The face value of the company’s shares is Rs.10. The company’s Registered Office is located at Phase IV, Industrial Area, S A S Nagar (Mohali), Punjab 160055. The company’s paid-up capital stands at Rs.12.42 crore. Free reserves amount to Rs.139.80 crore as on 31.03.11.

Expansion Of Capacity

Swaraj Engines is a Mahindra group company. The company manufactures and delivers engines to Mahindra’s Swaraj brand of tractors. This captive consumption of the engines produced frees the company from the need to concentrate on marketing its products. It is enough if it concentrates on quality of production without worrying about sales. The company is expanding its capacity to produce engines to 75000 engines per annum. The expansion programme will be entirely funded through its internal accrual.

Short Term Gains Are Possible

The highest and the lowest prices recorded by the shares of the company in the last one year are Rs.503 and Rs.349 respectively. At the current price, one can invest in the company’s shares for medium to long term holding. The stock market position is favourable for short term gains also as indicated by the following position: Quantity Traded 7,340, Deliverable Quantity (gross across client level) 6,666, % of Deliverable Quantity to Traded Quantity 90.82 %. This high percentage indicates that short term gains are also possible but the volumes are not enough to backup this claim.

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