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Business News/ Markets / Stock Markets1 to 389: Debt-free multibagger stock turns 1 lakh to 5.06 Cr in 23 years: Should you buy?
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₹1 to ₹389: Debt-free multibagger stock turns ₹1 lakh to ₹5.06 Cr in 23 years: Should you buy?

The industrial sector is the focus of Praj Industries Ltd, a mid-cap company with a market valuation of ₹7,170.60 Crore.

The closing price of Praj Industries' shares on Friday was ₹389.85 a piece, up 3.59 percent from the previous close of ₹376.35. (istockphoto)Premium
The closing price of Praj Industries' shares on Friday was 389.85 a piece, up 3.59 percent from the previous close of 376.35. (istockphoto)

The industrial sector is the focus of Praj Industries Ltd, a mid-cap company with a market valuation of 7,170.60 Crore. Praj is a market leader with a wide range of environmentally friendly solutions for breweries, high-purity water, critical process equipment, and bioenergy. With its headquarters in Pune, India, Praj has established a global presence in more than 100 nations across all five continents. Companies like Adani Solar, Indian Oil, Heneiken, Deepak Fertilizers, SAB Miller, Bajaj Hindustan, UB Group, Biocon, Procter & Gamble, Ranbaxy, Lupin, BASF, etc. are among PRAJ's multiple notable clients. According to Value Research's statistics, Praj Industries Ltd. is presently a debt-free company and is one of the stocks that has made investors crorepati over a 23-year period, providing a rationale for sticking with long-term stock market investments.

Praj Industries Share Price History

The closing price of Praj Industries' shares on Friday was 389.85 a piece, up 3.59 per cent from the previous close of 376.35. The stock price has gone up from 0.77 on January 1st, 1999 to the current price level, logging in a massive multibagger return and an all-time high of 50,529.87%; as a result, if an investor had invested 1 lakh in Praj Industries shares 23 years ago, it would now have grown to approximately 5.06 Cr. The stock price has gone up from 67.50 on September 1, 2017, to its current price level during the past five years, resulting in a multibagger return of 477.56% and an approximate CAGR of 42.16%. These returns would only have been achievable if there had been no corporate actions, such as stock splits or bonus shares; nevertheless, the company had declared bonus shares on two occasions, on July 18 2007 and August 17, 2005, both in a 1:1 ratio.

The stock has climbed 20.14% over the past 12 months, and it has gained 15.44% year to date (YTD) in 2022. On the NSE the stock had touched a 52-week-high of 448.00 on (03-February-2022) and a 52-week-low of 289.05 on (26-May-2022) which means that at the current market price of 389.85 the stock is trading 12.97% below the high and 34.87% above the low. At the current market price the stock is trading above the 5 days, 10 days, 20 days, 50 days, 100 days and 200 days Exponential Moving Average (EMA).

Praj Industries Q1FY23 Results

On a consolidated basis, the company reported net sales of 729.90 Cr in Q1FY23 compared to 386.30 Cr in Q1FY22 a YoY growth of 88.9%. In Q1FY23 the company's total expenses reached 674.10 Cr compared to 355.70 Cr in Q1FY22 a YoY growth of 89.5%. In Q1FY23 the company reported an EBITDA of 55.80 Cr compared to 30.60 Cr in Q1FY22 a YoY growth of 82.4%. In Q1FY23 the company's EBITDA Margins falls to 7.64% compared to 7.92% in the year-ago quarter. 

In Q1FY23 the company reported a profit before tax (PBT) of 54.20 Cr compared to 29.80 Cr in Q1FY22 a YoY growth of 81.9%. In Q1FY23 the company reported a profit after tax (PAT) of 41.30 Cr compared to 22.20 Cr in Q1FY22 a YoY growth of 86.0%. Praj Industries EPS has increased to Rs. 2.25 in June 2022 quarter from Rs. 1.21 same quarter of the last year, a YoY growth of 86.0%.

Should you buy the shares of Praj Industries?

The research analysts of the broking firm Prabhudas Lilladher have said “We initiate coverage on Praj Industries (PRAJ) with ‘BUY’ rating at target price of Rs.507 valuing it at PE of 30x FY24E. PRAJ is well poised for growth in the coming years given 1) its strong leadership in domestic ethanol plants (~60- 65% market share), 2) prominent global presence in more than 100 countries and 3) significant focus on future-ready technologies like 2G ethanol (orders for three 2G based ethanol plants), Compressed Bio Gas (CBG) (opportunity of 5,000 CBG plants) & Sustainable Aviation Fuel (SAF) and 6) diversification in Wastewater Treatment (ZLD), Critical Process Equipment’s & System (CPES) & HiPurity business. We anticipate PRAJ’s Revenue/PAT CAGR at 17.4%/29.3% over FY2022-25E led by robust order book, healthy tender pipeline, strong market leadership, pickup in execution, better operational efficiencies and well managed working capital cycle. The stock is currently trading at a P/E of 31.5x/23.1x on FY23/24E earnings. Initiate ‘BUY’."

They have further added that “We believe, PRAJ is well poised for growth in the coming years given 1) its strong leadership in domestic ethanol plants (~60-65% market share), 2) prominent global presence in more than 100 countries and 3) significant focus on future-ready technologies like 2G ethanol (orders for three 2G based ethanol plants), Compressed Bio Gas (CBG) (opportunity of 5,000 CBG plant) & Sustainable Aviation Fuel (SAF) and 6) diversification in Wastewater Treatment (ZLD), Critical Process Equipment’s & System (CPES) & HiPurity business. The stock is currently trading at a P/E of 31.5x/23.1x on FY23/24E earnings. We initiate coverage on PRAJ with ‘Buy’ rating at target price of Rs.507 valuing it at PE of 30x FY24E."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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ABOUT THE AUTHOR
Vipul Das
Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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Published: 27 Aug 2022, 04:32 PM IST
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