Swaraj Engines Limited

Industrials — Farm & Heavy Construction Machinery · NSE

₹3,522.00+₹1.30 (+0.04%)

DalalBaazaar Score

66 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

The 60-second version of Swaraj Engines Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Swaraj Engines Limited manufactures and sells diesel engines and its components, hi-tech engine components, and spare parts for tractor application in India. The company was incorporated in 1985 and is based in Mohali, India.

IndustryFarm & Heavy Construction Machinery

SectorIndustrials

Employees294

Annual revenue₹1,998 Cr

How does it make money?

Turns over ₹1,998 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 294 employees supports ₹6.80 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹6.80 Cr

Who are its competitors?

The closest listed comparisons in its industry are MAHINDRA & MAHINDRA LTD, ASHOK LEYLAND LTD, TATA MOTORS LIMITED, LARSEN & TOUBRO LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 52.8%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 49.3% against a peer median of 24.4% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE24.4%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 5.9% and earnings to grow about 5.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+5.9%

Est. earnings growth+5.6%

Analysts3

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +41% while net margin moved +4% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+41%

Margin effect+4%

DalalBaazaar Score

66/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.37 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

68/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

72/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

20.1x

3Y Median

26.2x

40 monthly readings · mean 26.1x · range 18.1x–37.0x

Sector Median

27.6x

median of 4 sector peers

🟢Current valuation is approximately 23% below its 3y median of 26.2x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 27% below the peer median of 27.6x.

vs. its own history

Cheap

26.2x median over 40 months · -23%

vs. sector peers

Cheap

27.6x median of 4 peers · -27%

vs. generic bands

Fair

15x–35x

EV/EBITDA

14.8x

PEG

1.47

What's Good / What's Bad

🟢 What's Going Well2

High return on capital employed
ROCE of 52.8% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 2 high

🔴Debt has risen sharplyFinancial
Total debt is up 67% over 3 years, from ₹1 Cr to ₹2 Cr.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 52.8% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Priced below its own history
The stock trades 23% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 27% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 12.2% CAGR
Latest reported year was 26.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 12%✓ 14.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹47 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 50%✓ 52.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

7 good · 2 neutral · 2 weak

Market Cap

₹4,279 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

20.1x

Fair

Fairly valued against the generic band

P/B Ratio

9.07x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹175.09

Profitable

Profitable on a per-share basis

ROE

49.3%

Strong

Strong capital efficiency

ROCE

52.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.53x

Low

Conservative leverage

Revenue Growth (YoY)

26.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

21.9%

Healthy

Profits growing at a healthy clip

Dividend Yield

3.12%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

-₹8 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

19.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

22.8%

Good

Assets are working hard

Operating Margin

12.6%

Average

Average margins

Net Margin

9.5%

Average

Average bottom-line conversion

Current Ratio

1.67

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.37

Defensive

Steadier than the market

52W Range Position

20%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

3561.2 / 3572.6

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

47.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,414 Cr	₹1,413 Cr	₹1,674 Cr	₹1,998 Cr	+12.2%
EBITDA	₹198 Cr	₹201 Cr	₹243 Cr	₹289 Cr	+13.4%
EBITDA Margin	14.0%	14.3%	14.5%	14.4%	—
PAT (Net Profit)	₹134 Cr	₹138 Cr	₹166 Cr	₹196 Cr	+13.7%
EPS	₹109.99	₹113.48	₹136.61	₹161.56	+13.7%
ROE	39.0%	37.4%	39.6%	40.2%	—
ROCE	51.4%	49.2%	52.2%	52.8%	—
Total Debt	₹1 Cr	₹1 Cr	₹2 Cr	₹2 Cr	+18.7%
Free Cash Flow	₹120 Cr	₹95 Cr	₹152 Cr	₹47 Cr	-27.0%

🟢 Revenue has grown at 12.2% a year over 3 years.

🟢 EBITDA has grown at 13.4% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 14.4% over 3 years.

🟢 PAT (Net Profit) has grown at 13.7% a year over 3 years.

🟢 EPS has grown at 13.7% a year over 3 years.

🟢 ROE has risen from 39.0% to 40.2% over 3 years (+1.1 pts).

🟢 ROCE has risen from 51.4% to 52.8% over 3 years (+1.4 pts).

🔴 Total Debt has grown at 18.7% a year over 3 years.

🔴 Free Cash Flow has shrunk at 27.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹779 Cr

Total Liabilities

₹290 Cr

Cash & Equivalents

₹17 Cr

Operating Cash Flow

₹117 Cr

Capex

-₹70 Cr

Shareholding (proxy)

Institutional Holding

8.7%

Insider Holding

57.4%

Corporate Actions

Dividend Rate

₹110

Ex-Dividend Date

03 Jul 2026

Analyst Consensus

Recommendations

3 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹4,659.67

+32.3% vs CMP

Target Range

₹4,500 – ₹4,979

Peer Comparison

Company	P/E	ROE
MAHINDRA & MAHINDRA LTD	17.8x	19.7%
ASHOK LEYLAND LTD	25.2x	24.4%
TATA MOTORS LIMITED	37.1x	32.8%
LARSEN & TOUBRO LTD.	30.1x	15.2%

Recent News

3 positive3 mixed

Swaraj Engines share price in focus after strong Q2 results; Centrum Broking sees 24% upside - What's next for the stock

TradingView, 13 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Swaraj Engines Share Price: Q2 Results and Rs 4,500 Target

Univest, 13 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Swaraj Engines shares zoom 15% as Q2 net profit rises 22%, revenue up 26%

Business Standard, 12 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Swaraj Engines Q2 FY27 results: Net profit jumps 21%; revenue from operations rises to ₹635 crore YoY

Upstox, 12 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Swaraj Engines Limited (NSE:SWARAJENG) Will Pay A ₹110.00 Dividend In Three Days

Simply Wall Street, 29 JunCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Swaraj Engines shares jump after Q2 results; here's what happened

Business Today, 12 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Growth · Profitability

MiddlingFinancial Health · Valuation · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 2 high-severity red flags sit above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑