Swaraj Engines - Attractive Dividend Yield, Low Growth Prospect To Weigh: ICICI Direct
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ICICI Direct Report
Swaraj Engines Ltd. is involved in manufacturing diesel engines for Mahindra and Mahindra Ltd.’s Swaraj brand of tractors. It is headquartered at Mohali (Punjab).
Steady ~10% compounding of revenues, Ebitda, profit after tax over past five years. Net cash positive balance sheet; consistent cash flow generation; highly capital efficient player with history of more than 30% return ratios and high dividend pay-outs.
Swaraj Engines reported steady Q4 FY22 results. Diesel engine volumes were at 23,937 units, down 29% YoY.
Net sales declined 21% YoY to Rs 242 crore tracking 1.6% QoQ average selling price increase.
Operating margins improved 50 basis points QoQ to 12.8% in Q4 FY22. Consequent profit after tax was down 33% YoY to Rs 22 crore (high margins in Q2 FY21).
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