Swaraj Engines Ltd. (SEL)|Q2FY15 Result Update | In line expectation | We maintain buy rating on stock with target price of Rs. 1184 :: IndiaNivesh

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SEL reported Q2 FY15 numbers in line with our expectation. The company witnessed
10% YoY and 1% QoQ growth in the revenue to Rs 1.67 bn (in line with our
expectation of Rs 1.68 bn) due to higher volume. Company’s engines sales volume
grew by 8.4% YoY (flat QoQ) to 20,054 units due to capacity addition. Average
realization increased by 1.81% YoY to Rs. 82,871 per unit. On operational front,
EBITDA margin contracted 27 bps YoY and 32bps QoQ to 14.7% due to higher raw
material expenses.

Net profit increased by 3% YoY and 1% QoQ to Rs 177 mn (vs. our expectation of Rs.
179 mn) due to higher top line, though the benefit was slightly offset by higher
depreciation and lower other income. Depreciation increased by 57% YoY and 4%
QoQ to Rs 35 mn due to change in accounting policy and capacity addition. The
company expansion plan to increase the capacity to 105000(current capacity is 75000
units) engines per annum is in progress and expected to complete by Q1FY16.

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