Praj Industry stock extends gains for 5th straight day, soars 6.5% to hit new record high; what’s driving the rally?

Shares of Praj Industries, a leading global biotechnology and engineering company, extended their winning streak for the fifth consecutive trading session on Wednesday as the stock spiked another 6.5% to hit a new record high of ₹658 apiece, surpassing its November 2023 high of 650 apiece.

The stock began its upward trajectory after the company released its Q4FY24 earnings on May 30. Over the subsequent 10 sessions, it sustained this bullish trend, resulting in a gain of 30%.

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Furthermore, the positive sentiment surrounding the stock was bolstered by the BJP-led NDA returning to power, instilling confidence among investors that the government would uphold its commitment to the Ethanol Blending Program (EBP). The program aims to achieve a blending rate of 20% by 2025–26.

With a commanding market share exceeding 50% in 1G ethanol and its unique position as the sole player in 2G ethanol, the company is well-positioned to benefit from the government's EBP targets. The program's ambitious goals, requiring approximately 17 billion liters of ethanol production capacity, further underscore the company's favorable position in meeting growing demand.

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Hardeep Singh Puri on Tuesday resumed the charge as the Union Minister of Petroleum and Natural Gas in the Modi 3.0 government. After taking charge, Puri said, "We were able to cross 15 percent of ethanol blending. As you know, the Prime Minister had set a target of 20 percent blending by 2030. On the basis of what I have seen and the basis of the work in progress, I am reasonably confident that the 20 percent blending target, which was brought forward from 2030 to 2025, will be completed by 2025."

Another Union Minister, Nitin Gadkari, asserted that vehicles in the country would run on green fuels in the coming years.

"Increased demand for ethanol will change the agro-economy of the country. This will make farmers 'urjadata' (providers of energy); they will no longer remain just 'annadata' (providers of food)," he said.

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Gadkari asserted that the ethanol industry is a boon for farmers, and demand for it will increase, which will change the agro-economy of the country.

"I want motorcycles, e-rickshaws, auto-rickshaws, and cars to be 100 percent ethanol-based in the next few years," Gadkari, the Union Minister for Road Transport and Highways, said.

Strong order book 

Meanwhile, the company had a consolidated order backlog of ₹3,528 crore at the end of FY24, compared to an order backlog of ₹3,414 crore at the end of FY23. The bioenergy sector forms the dominant share of the order book, accounting for 76% of the total, followed by the engineering sector, which accounts for 19%. 

The HPS segment constituted 5% of the of the share, according to the company's Q4 investor presentation. Its bioenergy portfolio comprises technology solutions for conventional biofuels, including 1G low-carbon ethanol produced from sugary and starchy feedstock. It also encompasses advanced biofuels, such as 2G ultra-low carbon ethanol and renewable natural gas (RNG) or compressed biogas (CBG).

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Additionally, the portfolio includes next-generation biofuels like Sustainable Aviation Fuel (SAF) and future biofuels such as biohydrogen.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.