Over 3x return in 1 year! This smallcap is ready for next level of growth
Shares of the company have rallied 259% to Rs 233.20 on April 16 from Rs 64.95 on April 16, last year
The transformation from an engineering company into solutions providers in renewable fuels and chemical is playing out well for Praj Industries. This is also visible from over 3.5 times return delivered by the company during the past one year. Shares of Praj Industries have rallied 259% to Rs 233.20 on April 16 from Rs 64.95 on April 16, last year.
Phillip Capital recently re-rated the stock as ‘Buy’ with a price target of Rs 270. On the other hand, the benchmark BSE Sensex has gained 59% during the same period. The brokerage believes that the company is now ready for the next level of growth, with significant opportunities in 1G, 2G, bio-CNG, and renewable chemicals and materials (RCM) supported by strong government commitment.
Market watchers believe that the traction in first-generation ethanol (1G) is better than expected. The government has also preponed its ethanol blending target of 20% to 2025 from 2030, and is doing all it can to achieve this. The company has developed capabilities in processing a diverse range of bio-based feedstocks into high-performance biofuels. Bio-mobility promotes the use of renewables to produce carbon-neutral transportation fuels across all modes of mobility.
The government is also promoting the procurement of ethanol produced from other non-food feedstock like cellulosic and lignocelluloses. Praj is selected as the technology partner for four big 2G projects and has received 2G equipment orders from HPCL and BPCL. There are expectations that the first 2G plant will kick off in 2021 itself.
Phillip Capital believe that the traction in 1G, compressed bio-gas (CBG), and 2G orders will support growth over the next two years for Praj Industries. With its leadership in biofuel technology, the company should benefit from upcoming opportunities in bio-mobility, bio-CNG, and RCM, with a global push for a sustainable environment. The company also enjoys a strong balance sheet (net cash at Rs 400 crore) and has a scalable business model.