SWARAJ ENGINES

The company declared its Q1FY15 numbers during market hours and looking at its closing in the green, it has been well received. With a net profit at Rs.17.60 crore, sequentially, it was flat growth though, YoY, it has shown a modest growth of 4.5%. Net sales rose 13% at Rs.165 crore but a 13% rise in operating costs and a 5% rise in tax outgo, pushed down the net profit. NPM for the quarter came in at 10.64% v/s 11.51% in previous Q1.

In terms of volume growth, engine volumes during the quarter rose 13% and it posted its highest quarterly sales  of 20,044 units and this was driven by increased demand from the Swaraj division of Mahindra & Mahindra. Its next phase of capacity expansion to 1,05,000 engines per annum is as per schedule and is expected to go on stream by Q1FY16.

A debt free company, 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.