Buy Praj Industries; target of Rs 751: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Praj Industries has recommended buy rating on the stock with a target price of Rs 751 in its research report dated February 01, 2025.

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February 03, 2025 / 11:04 IST

buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Praj Industries

We revise our FY26/27E EPS estimates by -25.7%/-11.2% accounting for higher D&A and other expenses associated with the Praj Industries’ GenX facility amid order delays. The company reported a mixed quarterly performance, with revenue increasing by 2.9% YoY, while EBITDA margins contracted by 478bps YoY to 6.9%, primarily due to order booking and execution delays in the Engineering segment. Despite these near-term challenges, Praj’s growth prospects remain robust. Starch-based ethanol plants continue to witness strong traction both in India and key international markets, including Brazil, Argentina, Panama, Paraguay, and Africa. Additionally, its product differentiation with new product offerings, such as bio-bitumen, distillers, corn oil, and rice protein are expected to drive the next phase of growth. Its joint venture with BPCL to set up CBG plants across India further strengthens its order pipeline. Despite a slowdown in USA SAF orders, management expects gradual recovery in medium term.

Outlook

We remain positive on PRJ in the long run given 1) its leadership in domestic ethanol projects (50-55% market share), 2) healthy export outlook in Engineering driven by ETCA, 3) large pipeline in SAF in the US and domestic CBG, 4) focus on new technologies such as 2G ethanol and biopolymers, and 5) improving margins owing to growing share of exports & services. The stock is trading at a P/E of 36.0x/22.6x on FY26/27E earnings. We roll forward to Sep’26 and maintain ‘Buy’ rating with a revised TP of Rs751 (Rs804 earlier), valuing the stock at a P/E of 33x Sep’26E (34x FY26E).

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