Praj Industries stock may give multibagger returns in a year’s time

Praj Industries Ltd has been ranked as the second hottest company in the Global Bio economy for 2021 in the low carbon fuel and renewable chemical category. It became the first Indian company to enter the top bracket of the industrial biotechnology sector globally. Praj is an industrial biotechnology company focusing on environment, energy and agri processing industries. It offers technology solutions to produce renewable transportation fuel in its “Bio Mobility” platform, ensuring sustainable decarbonisation. On the other hand the company’s “Bio Prism” portfolio comprises of technology for production of renewable chemical solutions. The government has recently allowed the direct sale of ethanol as a fuel for compatible automobiles in order to extend renewables usage across the country. Hence, on the domestic Bioenergy front, ethanol blending with petrol is reaching higher levels every month. The company has bagged a prestigious order from Godavari Biorefineries which is setting up the country’s largest sugarcane syrup based ethanol plant in Karnataka. Praj announced robust Q4FY21 financial results with revenue at Rs 567 crore as against Rs 297 crore for Q4FY20 and PAT of Rs 52 crores as against Rs 24 crores for Q4FY20 . The consolidated order backlog as on 31 March 2021 stood at Rs 1748 crores as against the FY20 order backlog of Rs 1083 crores. Analysts and brokers tracking the sector are extremely bullish on the scrip as sugar companies start working on their expansion and diversification plans in ethanol, therefore big orders are expected to come the Praj way. Short term traders are betting on Praj to come out with robust first quarter FY2022 financial results around mid August next month. The stock currently quoting at Rs 362 is an excellent buy and an aggressive purchase in every investor’s portfolio. It can post multibagger returns over the next one year and more. The economy seems to be exhibiting necessary resilience during the last few months on the back of better than expected GDP data, positive IIP performance and higher exports and GST collection. Equity analysts believe that it is going to be a stock pickers’ market during the next one year with bottoms up biased approach. And there are still many positive risk reward investment ideas like Praj Industries which are available across sectors from which investors can choose their favourite companies. There are many stocks in sectors like banks, cement, infrastructure, real estate, utilities, PSUs, gas and energy which have a lot of room for potential rerating. From many equity analysts and fund managers point of view, the Information and Technology and pharmaceutical sector look fairly valued. Similarly, the consumer staples and discretionary sector face Price to Equity derating risks on the back of stretched valuations. Alternatively, investors can also look at good performing Flexicap funds in the equity category of Mutual Funds.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.