Share of Praj Industries has delivered more than 600 per cent returns to its shareholders in the last 12 months. The share of industrial biotechnology company stood at Rs 53.95 on May 19, 2020. It has risen to Rs 398 today, translating into gains of 638 per cent during the period. In comparison, Sensex clocked 65 per cent in one year.
The stock opened 0.86 per cent higher at Rs 368.00 against previous close of Rs 364.85 on BSE. The small-cap share has gained 232 per cent since the beginning of this year. Praj Industries share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200-day moving averages. Market cap of the firm rose to Rs 7,041.49 crore.
"Praj Industries is a hi-tech technology savvy player in the ethanol blending equipment space where it enjoys a monopolistic status with a strong order book of Rs 650 crore as on date," Avinash Gorakshakar, Director of Research at Profitmart Securities, told Business Today.
"What is noteworthy is that the company is also equipped to tap the 2G ethanol opportunity where very few players have succeeded. It is also entering the CBG space which holds very strong business potential," he noted.
"All in all, we expect 27-28% CAGR in EPS growth over the next 2 years with ROCE expected to touch 30% in FY23 from 11% in FY20," he added.
Rajesh Agarwal, Head of Research, AUM Capital Market, told Business Today, "Praj has been doing exceedingly well. Q4 numbers have been very positive. Thebest part is the government's focus on ethanol blending.
"From less than 1% in 2014 to almost 8% now and a target of 20% by 2025 opens up huge opportunities for the company. Valuations though after this stellar run looks a little stretched, one can enter on dips for a long-term horizon," he added.
The company reported a net profit of Rs 52 crore in Q4. Profit in the year-ago period stood at Rs 24.86 crore. Net income from operations grew 91 per cent to Rs 567 crore for the quarter ended March 2021 compared to Rs 296 crore in the year-ago period.
The strong growth was aided by a two-fold jump in orders. For the quarter ended March 2021, order intake stood at Rs 650 crore as compared to Rs 222 crore in the year-ago period.
The consolidated order backlog as on March 31, 2021, stood at Rs 1, 748 crore (FY20 order backlog at Rs 1,083 crore), which comprised 85% domestic orders and 15% international orders.
"Activity levels have remained positively elevated with continued traction in inquiries across several business verticals including some significant order wins. Our continued focus on customer value enhancement and innovation has enabled us to build a solid platform to further consolidate this strong performance as we move forward," said Mr. Shishir Joshipura, CEO & MD, Praj Industries.
The company bagged a breakthrough order from Hindustan Petroleum Corporation Limited (HPCL) during the quarter for setting up a CBG project at Badaun in Uttar Pradesh.
It also bagged an order from Godavari Biorefineries to set up India's largest capacity syrup based ethanol plant in Karnataka. As a part of this project, Praj will expand the existing ethanol manufacturing capacity to 600 KLPD, using sugarcane syrup. When commissioned, this will become India's largest capacity syrup based ethanol plant.
Recently, the company also announced that it has developed technology to produce Bio-bitumen based on lignin. The Netherlands-based Circular Biobased Delta, one of Europe's premier consortia to promote bioeconomy, has approved Praj's Bio-bitumen samples processed from Purified Lignin, as a part of their flagship CHAPLIN program.
Lignin is one of the co-products resulting from the 2nd generation Ethanol plants, paper making, and also from Compressed Bio-Gas plants.
Praj Industries has developed a proprietary process (under patenting) to convert the crude lignin into Bio-bitumen which has the potential to replace this fossil-based bitumen and offer eco-friendly green bitumen. The binding and viscoelastic property of Bio-bitumen makes it useful for applications in asphalt.
Speaking on this development, Dr. Pramod Chaudhari, Founder Chairman of Praj said, "We are delighted to receive a certificate of approval from Circular Biobased Delta for Bio-bitumen samples produced by deploying our proprietary process technology. We understand that Praj is the first Asian company to have developed Bio-bitumen that has the potential to partially replace bitumen from fossil resources. Biobitumen is poised to play a significant role as road construction material while curbing CO2 emissions and boosting the Bioeconomy."
Praj's portfolio comprises Bio-energy solutions, Critical process equipment, and skids, Breweries, Zero liquid discharge systems, and High purity water systems.
The Board has also recommended a dividend of Rs. 2.16 per share for the financial year ending March 31, 2021 subject to the approval of shareholders in the forthcoming annual general meeting.
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