Praj Industries hits an over decade high on strong growth outlook

The stock was up 6% at Rs 137, rallying 25% in first seven days of the calendar year 2019 and trading at its highest level since September 26, 2008.

Shares of Praj Industries hit an over decade high of Rs 137 per share, up 6%, on expectations of strong growth outlook. The stock has rallied 25% in the first seven trading days of the calendar year 2019. It was trading at its highest level since September 26, 2008.

Praj Industries had posted 2.5 times jump in its net profit at Rs 12.43 crore during the first half (April-September) of the financial year 2018-19 (H1FY19). Net revenue grew 12% at Rs 443 crore against Rs 394 crore in the corresponding period of previous fiscal. EBITDA (earnings before interest, tax, depreciation and amortization) margin improved to 4.8% from 2.0%.

The company’s order book backlog expanded to Rs 900 crore in Q2FY19 as against Rs 755 crore in Q2FY18. Order inflow for the Q2FY19 stood at Rs 338 crore of which 76% is from domestic market which was as per expectations on the back of spur in set up/ expansion in distillery capacity by sugar companies.

According to ISMA, despite lower sugar production for SY18-19, sugar inventory to notch up to 11.2-12.7 million tonnes which is higher than normal stock requirement of 2-3 months. This could enable the sugar mills to produce more ethanol from ’A’ Grade and ’B’ Grade molasses to curb their excess inventory.

“We expect a high order growth number in Bio-energy segment to come in the next couple of quarters. Globally many countries are also shifting towards higher ethanol blending mandate which could keep export orders strong for Praj,” analyst at Stewart & Mackertich Wealth Management said in result update. The brokerage firm has “strong buy” on the stock with 12-month target price of Rs 156 per share.

Praj Industries commands around 70% market share in bio-energy business in India and is the only dominant player along with ISGEC ltd.

In the past six months, the stock rallied 83% from the level of Rs 75, as compared to a 1% rise in the S&P BSE Sensex.

At 01:38 pm; Praj Industries was trading 5% higher at Rs 135, against 0.64% gain in the benchmark index. The trading volumes on the counter nearly doubled with a combined 5.88 million equity shares changed hands on the NSE and BSE so far.