The XLRI Student Investment Fund

Equity Research Report

August 2018

Rohit Singh
b18103@astra.xlri.ac.in

The XLRI Student Investment Fund 1

 CMP Target
Target Rating

Swaraj Engines Ltd. (1/3) Rs 1806 Rs 2410 BUY

Business Description
 Swaraj Engines Ltd. (SEL) was promoted by erstwhile Punjab Tractors Limited ( since merged with Mahindra and Mahindra Ltd.) and Kirloskar Oil
Engines Ltd. in 1985
 Swaraj Engines Limited manufactures and markets diesel engines.
 The Company's products are primarily sold to manufacturers of agricultural tractors.
 SEL is into manufacturing and supplying of diesel Engines in the range of 22 HP to above 54 HP. It is also manufacturing hi-tech engine components.

LTM Share Performance

Last 5 years Returns
350%

300%

250%

200%
Axis Title

Swaraj Engines
150%
Sensex
100%

50%

0%
2-Aug-13 2-Aug-14 2-Aug-15 2-Aug-16 2-Aug-17 2-Aug-18
-50%

The XLRI Student Investment Fund 2

 CMP Target
Target Rating

Tata Chemicals Ltd. (3/3) Rs 1806 Rs 2410 BUY

Valuation Calculation of Target Value

 The multiple used for valuation is EV/EBITDA as the sector involves more
of debt in its capital structure and Enterprise Value can be calculated to
give a more realistic value of the firm Median EV/EBITDA Value (in Rs. Crores)
 Current EV/EBITDA values of peers are taken from Capitaine, and the 18.5 27398.5
median is assumed to be the multiple for FY 2018 Total Enterprise Value 27398.5
Enterprise Value 27398.5
Less: Debt 0
Date 2nd August, 2018 Add: Cash equivalents 1829
Market Cap Rs. 2208 Crores Total Market Value 29227500000
No. of Equity Shares 12126684
52 week L-H 1642 – 2180
Target Value Rs. 2410
Current Market Price 1806

Return comparison with Sensex Return comparison with Sensex

Median EV/EBITDA Value (in Rs. Crores)

Last 5 years Returns
18.5 27398.5
350%
Total Enterprise Value 27398.5
300%
Enterprise Value 27398.5
Less: Debt 0
250% Add: Cash equivalents 1829
Total Market Value 29227500000
200%
No. of Equity Shares 12126684
Axis Title

Swaraj Engines
150% Target Value 2410.180722
Sensex
100%

50%

0%
02-Aug-13 02-Aug-14 02-Aug-15 02-Aug-16 02-Aug-17 02-Aug-18
-50%

The XLRI Student Investment Fund 3