@sujay85
Thanks for your message. Swaraj is one of the best companies I have invested in. If you need to read (rather see) cleanest balance sheet among Indian Business, Swaraj Engine would be one of them in my opinion. Given the cashflow generating business which can grow annually at around 15% without major capex for another 10 years (as per my understanding given that company has almost half land only occupying current plan and hence scope for
multiple brownfield expansion over next 5-7 years) and exceptional cashlfow generating high ROCE expanding (but definitely volatili), Swaraj is among my core holding since nearly decade now. I have occassionally increased and reduce my holding in the company based on my view of price.
Swaraj has done well when agriculture was controlled. If case all state in India decide to decontrol land ownership and allow corporate farming, that may result major booster in agri productivity and also mechanisation of labour, which shall indirectly benefit Swaraj TRactors and hence Engine. Even if no change in regulation, still Engine show pattern of Tractor business growth with moderate volatility. So I do not see any negative development (keep aside positive for time being).
As the sector is cyclical, Swaraj Engire directly linked to Tractor industry. Normally Tractor industry has 3-4 years of upcycle followed with 1-2 years declince/stability phase. Even monsoon rainfalll also add seasonality to cycle. However, Swaraj Enginre shown relatively less volatile sales as compared to tractor industry. One reason being that Swaraj has constantly increased it share of engine supply when compared to Mahindra tractor sales. It would make sense for Mahindra to move share of tractor engine sourced from Swaraj as same being also owned by Mahindra.
However, business prospect and share price can not be insulated from volatility of business and share makret. In past, I have increased and declined holding in Swaraj Engine shares depend on my perception of business prospect and share price.
Find enclosed my dealing Swaraj Engine over period. Please note that I have used a mutiple of my actual quantity of trading, I am reluctant to share that information. The quantity in enlcosed trade broadly to give view about % holding bought and sold over period. The price are actual, date are actual, but quantity is mutiplied with certain factor.
Please note that my reading of future may be wrong. One also need to consider important factor of Evehicle in Autombile industry and impact of same on Tractor industry (in context of requirement of Engine). Hence, future may not be same as past growth. Also, this is based on my uderstanding of industry and Swaraj business, which may be completely wrong.
Disl: Among my top 10 holdings. Sold maginal quantity in last 2 months increase in cash in portfolio. My view may be biased. Not a SEBI registered analyst. I am not recommending any investment action in the company. Investor shall do their own due diligence before making any investment decision.