Prabhudas Lilladher recently issued Buy Call on Praj Industries, along with a new Target Price for the company. Now, let’s examine the research reports and explore their overviews.
Praj Industries is a renowned company that specializes in providing innovative solutions for sustainable bioenergy and environmental protection. Founded in 1983 by Mr. Pramod Chaudhari, Praj Industries is headquartered in Pune, India.
The company operates on a global scale, serving customers across various regions. It has a strong presence in more than 75 countries, catering to industries such as ethanol, brewery, water, wastewater treatment, and renewable chemicals.
First of all, let’s take a look at the current share price of Praj Industries. To visualize these changes, we can refer to the Praj Industries Share chart which displays the historical share prices, indicating the ups and downs over time.
Prabhudas Lilladher’s Report Overview
Praj, a leading company in the bioenergy sector, has reported a strong quarterly performance, demonstrating impressive revenue growth and an expansion in EBITDA margin. In FY23, the company experienced order inflows amounting to Rs50.6 billion, representing a 17% YoY increase. This growth was primarily driven by 1G ethanol orders in the Bio Energy segment, which saw a 22% rise to Rs33 billion. However, as 1G order inflows are expected to reach their peak in FY24, the sustainability of order inflows in FY25 from newer opportunities will be closely monitored.
A positive development for Praj is the recent successful trials of commercial flights using a blend of Sustainable Aviation Fuel (SAF) conducted by Praj, IOCL, and Air Asia. This achievement bodes well for future opportunities, as there is a likely requirement of 140 million liters of SAF per year to meet the 1% blending target.
To capitalize on these opportunities, Praj has planned a capital expenditure (capex) of approximately Rs2 billion. This capex includes the establishment of a modern manufacturing facility for the Energy Transition and Climate Action (ETCA) segment, which has the potential to generate 30-40 times its initial revenue over time (Rs1 billion), as well as a demonstration plant for Polylactic Acid (PLA) to facilitate the commercialization of bioplastics (Rs600 million).
Given Praj’s strong leadership in domestic ethanol plants with a market share of approximately 50%, its global presence, and its focus on future-ready technologies such as 2G plants, Compressed Bio Gas (CBG), ETCA, and SAF, we believe the company is well positioned to benefit from upcoming opportunities. We expect Praj to achieve a revenue and profit after tax (PAT) compound annual growth rate (CAGR) of approximately 8% and 16%, respectively, from FY23 to FY25E.
The current trading multiple for Praj’s stock is at a price-to-earnings (PE) ratio of 23x/21.3x for FY24/25E. We maintain a ‘BUY’ rating on the stock with a revised target price (TP) of Rs475 (previously Rs495), valuing it at 27x FY25E (previously 28x FY25E), considering the plateauing order visibility post FY24.
Prabhudas Lilladher Buy Call: Praj Industries
Praj Industries’ current market price is Rs 374. Recently, Prabhudas Lilladher recently issued Buy Call on Praj Industries with a new Target Price of Rs 475.
Here’s a table summarizing the ownership structure of the company.
- Promoters- 32.32%
- Foreign- 17.83%
- Domestic Institution- 8.34%
- Public & Others- 41.51%
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