Despite a strong growth in the India tractor industry, Swaraj Engines (SWE) reported a moderate volume growth. Considering stellar growth reported by M&M\u2019s tractor division, this performance was below our estimates. 4QFY18 EBITDA\/PAT improved 19.0% YoY, on the back of 9.8% growth in volumes and 49 bps YoY expansion in EBITDA margin. SWE\u2019s EBITDA and PAT were below our expectations on account of a slower than expected volume growth, affecting the topline. We acknowledge that SWE is poised to leverage the continued good growth momentum in tractor industry, with higher return ratios. Considering growth momentum in tractor industry, we maintain our 'Buy' rating on the stock, with a target price of Rs 2,402. SWE\u2019s volumes rose 9.8% YoY to 21,780 units, and net realizations increased 5.0% YoY QoQ to Rs 85,060, which pushed up the company\u2019s top-line by 15.2% YoY to Rs 185.3 crore, lower than our estimates. The company\u2019s EBITDA margin improved by 49bps YoY to 15.4%, due to marginal contraction in RM costs and other overheads (both as % of sales). Consequently, 4QFY18 EBITDA\/PAT grew by 19.0% YoY. 4QFY18 PAT stood at Rs 17.9 crore was below estimates, primarily due to lower than expected volume growth. The company\u2019s yearly volumes grew by 11.8% and net realizations increased by 3.5%, subsequently the net revenues increased by 15.8% to Rs 771.2 crore. SWE maintained its strong margin profile and EBITDA grew by 16.3%. Subsequently PAT increased by 16.4% for the year to Rs 80.1 crore. The board of SWE recommended a dividend of Rs 25 per share and a special dividend of Rs 25 per share, taking total dividend of Rs 50 per share. This came after their recent buyback of Rs 70.73 crore. Based on our recent interactions with Swaraj tractor dealers, we understand that the overall demand was good during Q4FY18. Dealers pointed out that two consecutive years of normalto-good monsoons, improved crop production, easy availability of credit to farmers and increasing use of tractors in non-agricultural sectors are responsible for the growth in tractor sales.