Markets have been increasingly volatile lately. Every rally is being broken, and investors are trying to find the next one before it’s too late. However, if you’re a long-term investor, here is one good value stock that you can buy!
Swaraj Engines, formerly Punjab Tractors Limited and Kirloskar Oil Engines Ltd., was established in 1985. The company is into manufacturing and supplying of diesel engines for the range of 22 HP to above 65 HP. They are equipped with highly productive & precise quality analyzing machines. Swaraj Engine manufactures hi-tech engine components as well, which have been very consistent in terms of profitability expectations year after year; this year they declared a dividend amounting to Rs 800 or Rs 80 per share on their current market price at 1500 INR per share making their returns 5%. The register for memberships and Share Transfer Books will remain closed from 2nd July, 2022 to 8th July 2022 so that all eligible people can receive the dividends due them. So if you’re planning on buying shares with an expectation towards receiving dividends then it’s important that you keep these book closure dates in mind.”
In terms of fundamentals too, the stock of Swaraj Engines is pretty good. The company is a debt free company, with good liquidity. Swaraj Engines is not only net cash positive b/s;, but has a consistent cash flow generation. It is also highly capital efficient player with history of >30% return ratios & high dividend pay-outs.
ICICI Direct in its recent report has set a target price of Rs 1680 on the stock. “Play on farm mechanisation courtesy 33% volume share of M&M’s tractor sales via Swaraj brand. Beneficiary of normal to positive monsoons,” the brokerage has said in its recent report. The shares of Swaraj Engines has fallen from levels of Rs 1989 to the current levels of Rs 1500. Long term investors can buy the stock for its steady dividends.
Avoid investing lumpsum in the stock
ICICI Direct has maintained a hold rating tracking muted growth prospects in tractor space on high base of FY21 amid high dividend payout & resulting yields (5%). According to the firm, Sales, net profits are likely to grow at 10%, 11.5% CAGR, respectively, over FY21-24E, building in 6.6% volume compounded annual growth rate.
Whether you are buying the stock of Swaraj Engines or any other stock, we would recommend buying in small quantities. Markets are highly volatile and are vulnerable to selling pressure at higher levels. Look for stocks that offer good dividend yields. Also, debt free stocks like Swaraj Engines would gain, given that interest rates are headed higher. While we are suggesting buying stocks, we recommend buying small quantities through systematic plans, rather than large quantities. Also, holding for the longer term can ensure that you make money. For example, Swaraj Engines stock has delivered handsome returns to investors over the last 7 to 10 years. So, buy into value stocks, keeping a long term view.