Praj Industries shares jump 10%, IOC hits new 52-wk high after JV announcement

Shares of Praj Industries surged about 10 per cent during the early trading session on Friday after the company after the company announced to form a joint venture (JV) with Indian Oil Corporation (IOC). The company informed about the same via an exchange filing with the bourses.

IOC and Praj Industries have signed a term sheet to advance plans to strengthen biofuels production capacities in India, the company said in an exchange filing on Thursday. Both the entities have also previously collaborated in the past to facilitate a greener future.

According to the company statement, various biofuels covered under this MoU include sustainable aviation fuel (SAF), ethanol, compressed bio-gas (CBG), biodiesel and Bio-bitumen among others.  In October 2021, both companies had entered into an agreement to form a 50-50 joint venture to this end.

Following the announcement, shares of Praj Industries rallied about 10 per cent to 405.90 on Friday, before giving up gains to trade at Rs 397.90 at 10.50 am. The company commanded a total market capitalization of more than Rs 7,300 crore. The scrip had settled at Rs 370.55 on BSE on Thursday.

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Similarly, Indian Oil Corporation gained as much as 3 per cent to Rs 101.20 on Friday, hitting its new-52 week high, during the session. The company was commanding a total market capitalization of Rs 1.42 lakh crore. The scrip had settled at Rs 98.60 on Thursday.

In pursuit of energy self-reliance by leveraging captive resources, the country has aggressive plans to reconfigure the transportation fuel mix with biofuels. Biofuels are an integral part of India's flourishing Bioeconomy that plays a significant role as a sustainable climate action tool, the company said in the release.

Domestic brokerage firm Prabhudas Lilladher has buy rating on Praj Industries with a target price of Rs 475 apiece, Axis Securities pegs its value at Rs 500 apiece with similar rating citing as its domestic business augurs well as Ethanol Blending continues with strong traction in FY23.

Fitch Ratings said IOC's plans to raise capital should strengthen their capex spending and the credibility of emission-reduction plans.  Prabhudas Lilladher is also positive on Indian Oil Corporation with a buy rating and a target price of Rs 125 on the stock.

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