Buy Swaraj Engines Ltd. target Rs 2570: ICICI Direct
Buy Swaraj Engines Ltd. at a price target of Rs 2570.
The current market price of Swaraj Engines Ltd. is Rs 2352.2.
Time period given by ICICI Direct is 12-18 months when Swaraj Engines Ltd. price can reach defined target.
SEL has a superlative balance sheet with Nil debt, negative working capital cycle and robust return ratios. Average RoCE, RoE & RoIC over FY17-19E is expected at 36 per cent, 28 per cent & 206 per cent respectively.
Recently accounted farm loan waivers by key agrarian states will certainly aid tractor growth however; it is not the optimum solution to address farm distress.
Incorporating the same and positive monsoon momentum we upgrade our estimates and valuation multiple.
ICICI Direct believes that SEL will command premium valuations given high certainty of double digit earnings growth coupled with prominent presence in government focussed farm segment.
It expects SEL to clock engine sales volume CAGR of 16 per cent over FY17-19E to 110682 units in FY19E. Moreover, sales and PAT are expected to grow at a CAGR of 17 per cent and 20 per cent, respectively, in FY17-19E.