Buy Praj Industries; target Rs 60: Nirmal Bang

Nirmal Bang's research report on Praj Industries

"Praj Industries is a technology driven company with an established market position in the ethanol project and process engineering business. Although the current business environment remains challenging, we believe that going forward, with capex revival and aggressive efforts for its new emerging businesses, order inflow momentum should pick up, aiding revenue growth in FY14. We expect margins and return ratios to improve with higher contribution from new businesses and internationalization. The almost-zero debt balance sheet, healthy cash and underperformance of the stock price limits significant downside risk from hereon, while any improvement in demand will lead to rerating of the stock. Successful commercialization of the 2nd generation ethanol plant would be a big trigger for the stock." "On the valuation front, the stock is trading at PE of 6.8x FY15E EPS and 1.0x FY15E P/BV respectively, which are at the lower band of its historical valuations. We value the stock at 11.0x FY15E EPS, arriving at a price target Rs. 60. Hence, we recommend a buy on the stock for a potential upside of 61 percent from current levels with a 15-18 months view," says Nirmal Bang research report. Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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