Market Price Rs 87 (FV10) Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 1553 crs Date: 27th May 2016
Target : Rs 115 Time frame: 1 year
About the Company:
This company has completed completed 32 years of existence. It has seen rough patches as well. The founder of the company Mr Pramod Chaudhari is a visionary who has managed to transform Praj Industries limited to where it is today and has presence in 60 countries. The company has a brand new logo and has shifted to Praj House in Hinjewadi ( Pune). The letter written to the shareholders by Mr Chaudhari in year 2014 mentions the major turnaround and also tells us how Praj is going to evolve in the next few years and 2 years down the line, we really feel the results.
The company has presence in Alcohol plants, Ethanol plants, Brewery plants manufacturing. Apart from this it has Water and Waste management business and it has a subsidiary in the name of Praj Hi Purity Systems Ltd. The company has also introduced some Biotech products in the market. It has presence in Solid waste management. All the business which the company operates in are very specialized and has entry barriers. Few multinationals are doing such sort of business.
The company has several futuristic products in its pipeline. The company will add greater value to its services in the time to come.
The company has a CRISIL A + rating. In the year 2012-13, the company saw revenues of 726 crores and net profit of 66 crores. For the year 2013-14, the company saw sales of 782 crores and net profit of 62 crores. The year 2015 end saw sales at Rs 801 crs and net profit of Rs 68.73 crs. The year 2016 saw sales of 823 crores and Net profit of Rs 66.73 crs.
The company is debt free and has huge reserves of 600 crores plus. Book value of the company stands at Rs 38 per share and the company declared and paid Rs 1.62 per share dividend of . The tax free dividend pay out ratio is about 2.5%. This coming year will be better and stronger for the company.
Promoters hold about 33.9% HDFC Trustee hold 9%, Tata group holds 8% , Lic 4% , Vinod Khosla holds 1.61% and L & T hold 1.09 rest is held by public.
Comparisions to Peers:
Companies like Praj, can be compared to Thermax etc and can command a very high PE of about 20 to 25 in the longer run.
The DNA of this is just right. It is in the right spaces. After fully transforming the company to a new identity and a brand new corporate house, the company is poised to excel in the field of Engineering and Water management. Best part is that it is a debt free company and prominent investors sitting in the company which adds to the confidence.
The current rate of Rs 87, it has the potential to jump to 100 levels in the medium term and also reach Rs 115 in the next 1 year.
( Disclosure: The analyst has no holdings in the company as on date of issue being published)
Sebi Registration No: INH000001717