Swaraj Engines share price surges as company announces 330% dividend

MUMBAI: The share price of Swaraj Engines, the company that supplies tractor engines to the Swaraj Division of Mahindra & Mahindra, surged by close to 10% intra-day and was trading at Rs 446 that is 7.5% higher than its previous close at the end of the day's trade.

The buoyancy in the share price was the result of dividend of Rs 33 on the face value of Rs 10 per share declared by the company as its announced its results for the financial year ended Mar '31 '2013.

Despite the severe slump in the tractor business during the year, Swaraj Engines reportedly sold 57,377 units of engines in FY '13 that is 4% higher than 55,239 units of engines sold by the company a year before. Resultantly, the company's revenues for the year rose by 7% to Rs 479 crore while the net profits surged by about 5% year on year to Rs 55.4 crore.

There was however a marginal contraction of about 50 basis points in the company's operating margins to 15% from 15.5% a year ago as the company saw a rise in the material cost year on year. The raw material cost a percentage to sales rose by 250 basis points to 77% from 75.5% a year ago.

However, following a significant rise in the other income during the year, the company could report a decent 5% growth in its bottom-line. Swaraj Engine reported other income of over Rs 15 crore for the year against Rs 12.24 crore reported in FY '12.

The company's dividend declaration is the result of healthy cash position being held by the company as at the end of the FY '13 fiscal. The company has over Rs 80 crore as cash surplus in the books as at the end of the year against Rs 70 crore of cash in the books in the previous year.