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Friday, March 25, 2011

Buy Stocks of Praj Industries for price target Rs.102

Here is a Buy Stocks report on Praj Industries with target stock price of Rs.102. This recommendation is on the back of rising demand of ethanol processing refinery and related technologies. Check out this Stock Report on Praj Industries published by KRChoksey, a stock broker.

Praj Industries is one of the few companies engaged in solutions research and development for ethanol, biodiesel, brewery plants and process equipment and systems. They have customers spread around the globe. Business line of company includes alcohol/fuel ethanol plants, biodiesel plants, brewery plants, environmental engineering, bionutrients, customized engineering and manufacturing, and agri services. The Company supplies a range of nutrients to the fermentation industry like distilleries and breweries, which is consumed in the course of production.

US senate has passed legislation for 15% ethanol mixing mandatory. This will create market and demand for additional bio refinery capacity of approx 4 billion gallons p.a. This creates opportunity of USD 6-8 billion for Praj Industries in US alone and company has started receiving enquiries too.

Order book trend for Praj Industries is quite encouraging thru Q3 FY11. The company received new orders of Rs.250 crores during Q3FY11. Order book for comapny, as on December 31, 2010 stands at Rs.700 crores. These order will be executed in next 1 year.

As stated above about business opportunity of USD 6-8 Billions, if Praj Industries gets even 7-10% of the estimated USD 6 billion, it would translate into fresh order of USD 400-600 million i.e. Rs.1890-2700 crores. Ever rising crude oil prices have made ethanol blending all the more attractive for OMCs to reduce the losses on subsidized fuels as ethanol price has been capped at Rs.27/litre. This will create additional demand for ethanol refineries from OMCs and sugar manufactures.

Fresh orders due to revival in global economies and rising crude oil will bring business back to Praj Industries. At current Stock Price of Rs.70, the stock trades at a PE of 13.7x FY12E EPS. The Stock Report recommends to Buy Stocks of Praj Industries with 1 year price target of Rs.102 valuing the stock at 20x FY12E earnings. This is upside of 46%. Download detailed Stock Report PDF here.

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