Bullish on Swaraj Engines: Rajesh Jain

ET Now spoke to Rajesh Jain, Market Strategist, on his stock picks.

ET Now: What is your first recommendation of the day?

Rajesh Jain: Swaraj Engines is an excellent example of what backward integration and value chain management can do for a company. It has been a supplier of engines for Punjab Tractors and with the acquisition by Mahindra Group, the company has the potential to increase volumes by a significant factor indeed by multiples over a period of 2 to 3 years and all this can be done at existing facility near Chandigarh.

What really recommends Swaraj Engines is the fact that it makes highly fuel efficient engines and from a stock market perspective, the appreciation is going to come from a huge increase in volumes, thanks to very robust sales via Punjab Tractors as well as Mahindra and the possibility of Swaraj Engines getting orders from Mahindra as well.

Swaraj Engines has very low debt and we have seen some excellent margin expansion that began last year and is likely to continue going forward and this ramp up in volumes is going to happen with a very little expenditure on capacity enhancement.