SWARAJ ENGINES

The company declared its Q4 and FY14 numbers after market closure and the stock had closed the day in the red. But looks like the stock will have a lot to cheer for today as apart from the robust numbers, the company has declared an annual dividend of 150%/share (Rs.10 face value) and on top of that, “following its Investor friendly approach and keeping in view of company’s surplus cash position, the Board, over and above the said normal dividend, has continued with a special dividend payment of 200% (Rs. 20/share) for FY14 as well, taking the total dividend to Rs.35/share. Last fiscal, in FY13, the company had rewarded shareholders with similar generosity, a dividend of Rs.33/share.

On the financial performance front, the company for Q4FY14 posted a 40% (yoY) jump in net sales at Rs.158 crore while net profit rose 21% at Rs.17 crore. The company is debt free and that is a huge plus going for the company. It ended FY14 with a 22% rise in net profit at Rs.67 crore. On an equity of Rs.12.42 crore, the EPS for FY14 stands at Rs.54, discounting yesterday’s closing price of Rs.680 by less than 13 times. Its reserves have swollen from Rs.181 crore to Rs.197 crore. Cash balance is at Rs.109 crore, up from Rs.81 crore in FY13, which explains the generous dividend.

Mahindra & Mahindra holds 33.22% stake and Kirloskar Industries holds 17.39%. The company, apart from supplying engines to Swaraj division of Mahindra & Mahindra also supplies hi-tech engine components to SML Isuzu.  A debt free company, it funded its recent capacity expansion  via internal accruals. The fortunes of the company are directly linked with that of the agriculture sector, which is for tractors. Thus if the harvest is good, the company could have a much better fiscal.