Praj Industries hits record high on strong order inflow hopes; stock up 9%

Shares of Praj Industries climbed 9 per cent to hit a record high of Rs 453.65 in Thursday’s intra-day trade, on the back of heavy volumes and hopes of strong order inflow in the coming quarters. The stock surpassed its previous high of Rs 448.25, which it had touched on January 20, 2022.

At 12:20 PM; Praj Industries quoted 8 per cent higher at Rs 448.15 per share, over two-fold jumped in average trading volumes. In comparison, the S&P BSE Sensex was up 0.66 per cent at 58,449 points. A combined 5.41 million shares changed hands on the NSE and BSE so far.

Praj is engaged in the business of process and project engineering. The company caters to both domestic and international markets. Further, the company also provides design and engineering services.

The company remains optimistic of the ethanol industry beyond E20 target. Several policy measures under discussion like flex fuel vehicles, stationary diesel engine conversion to ethanol, diesel blending program, export of ethanol under certain circumstances, are all likely to drive the demand of ethanol further. These auger well for sustained demand for ethanol beyond the calendar year 2025 (CY25), said the company.

That apart, they also believe that the commissioning of first 2nd generation ethanol plant will reinforce confidence among potential developers from both domestic as well as global level.

"The ecosystem development is still underway for the Compressed Bio Gas (CBG) business in India. Commissioning of initial commercial scale CBG projects in immediate future will demonstrate end to end functioning of the value chain. This will help in creation of meaningful CBG capacity as envisaged in the SATAT Policy," said the management.

Analysts believe that the company sounded positive about the strong order inflows in the coming quarters, given government's target to achieve 20 per cent ethanol blending by 2025 (EBP-20).

"2G ethanol, in management’s view, is significant in context of carbon reduction and there is a lot of interest not only in India but also from overseas market particularly from Europe. They further indicated that Compressed Bio Gas (CBG) is at the beginning stage and there is interest from both the government and private sector, particularly after indexing its prices with CNG," analysts at Kotak Institutional Securities said.

Besides, analysts also believe that the company's technological capabilities in bioenergy segment and future technology will reduce carbon footprint.

"There are significant opportunities in 1G, 2G, CBG (Compressed Bio-gas), SAF (sustainable aviation fuel), etc. In our view, Praj can command premium over its historical valuation based on the strong market position in the space, which is well supported by positive outlook on order book and robust business prospects in the long term,” the brokerage firm added.