Buy Praj Industries; target of Rs 671: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Praj Industries has recommended buy rating on the stock with a target price of Rs 671 in its research report dated May 31, 2024.

Broker Research

June 04, 2024 / 13:03 IST

Buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Praj Industries

We revise our FY25E EPS estimate by -2.0% factoring in slightly lower execution this year. Praj Industries (PRJ) reported decent quarterly performance with revenue rising 1.2% YoY and EBITDA margin expanding by 198bps YoY to 12.4%. There is strong traction in starch-based ethanol, domestic CBG, and ETCA in international markets, while traction is building up in grain-based ethanol in Brazil and low-carbon ethanol in USA. Sugar based ethanol ordering will likely pick up in FY25 following softness in H2FY24. The company’s strong Engineering order book should translate into robust revenue growth in FY25. Praj is also scaling up its services business by continuously adding new offerings for its growing customer base. We remain positive on PRJ in the long run given 1) its leadership in domestic ethanol (~50-55% market share), 2) large domestic CBG pipeline, 3) healthy export outlook in Engineering driven by ETCA, 4) focus on new technologies such as 2G ethanol, SAF, bio-manufacturing, and multi-feedstock plants, and 5) improving margins owing to growing share of exports & services. The stock is trading at a P/E of 27.9x/21.8x FY25/26E.

Outlook

We roll forward to FY26E and maintain ‘Buy’ rating with a revised TP of Rs671 (Rs636 earlier), valuing the stock at a P/E of 28x FY26E (28x Dec-25E earlier).

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