Microsec strong buy dont miss for 40% upside

Swaraj Engines Ltd (SEL) announced its Q4FY15 and FY15 on 27th April, 2015. The company’s results were
below estimates as the sharp decline in overall domestic tractor numbers during the second half of the
FY2015 had impacted company’s sale for the year. Nevertheless, we believe strong volume growth
would likely to be seen in FY16e from its capacity expansion to ~1,05,000 engines p.a.,
increased demand from M&M, expanded capacity utilization in FY16e to enhance margins,
presence in all HP segments, softening of commodity prices and dependence on agriculture
industry bodes well for the SEL’s fortune. At the current CMP of INR788.50, we retain a “STRONG
BUY” with a target price of INR1100 i.e. an upside of 39.76%.