Buy Praj Industries; target of Rs 495: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Praj Industries

We revise our FY23/24 estimates by 6.6%/-2.3%, factoring in strong Q3 performance and completion of legacy orders in medium term. Praj Industries (PRJ) reported healthy quarterly revenue (up 55% YoY), along with EBITDA margins improving 139bps YoY to 9.5%. The company has turned selective on taking profitable orders to protect its margins, especially in starchy-based 1G-plants orders from new customers. Nonetheless, order for ~4.5-5bn liter is yet to be tendered out to meet EBP20 target, for which it’s addressable opportunity is ~Rs60bn. PRJ is in advance stage of discussion for 2G ethanol plant offerings in Europe. Management guided 1) EBP20 (1G plant) to be short term growth driver, 2) CBG and 2G plants both to drive medium term growth and 3) Sustainable Aviation Fuel (SAF) to drive growth in the long run. We believe PRJ is well poised to benefit from upcoming opportunities given 1) its strong leadership in domestic ethanol plants (~50% market share), 2) global presence and 3) focus on future-ready technologies like 2G plants, Compressed Bio Gas (CBG) etc.

Outlook

We roll forward to FY25E and maintain ‘BUY’ rating at revised TP of Rs495 (Rs520 earlier) valuing 28x FY25E EPS.

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Praj Industries - 08 -02 - 2023 - prabhu