This multibagger stock has risen nearly 200 percent this year on ethanol opportunity. Will the valuations sustain

15 Aug , 2021 By : Kanchan Joshi

Praj Industries shares have outperformed on the rising consumption in ethanol and government's commitment on increasing ethanol production. The multibagger stock has given nearly 300% returns in one year and skyrocketed 180% this year (year-to-date) alone, continued to giving multibagger returns with the stock trading from Rs68 level in August 2020 to now currently trading at around Rs337 per share.

Praj Industries is engaged in the domestic distillery and brewery installation business. Headquartered in Pune, the company is a supplier of ethanol plants and is a globally leading company with a bouquet of sustainable solutions for bioenergy, high purity water, critical process equipment, breweries and industrial wastewater treatment. The company continues gaining prominence with government focus on increasing ethanol production.

Analysts see the company to benefit more going forward on the ethanol opportunities and leadership in biofuel technology along with a strong order pipeline.

''The company is on a long term growth path and with the new initiatives that the company is working on we could see net profit more than tripling over the next 2to 3 years. So although the stock has run up significantly, we believe the company will be able to sustain high valuations going forward and hence the remain positive. Going forward any dip due to short term movements can be used to accumulate the stock,'' said Ujjawal Kumar, Analyst, Green Portfolio.

The transformation from engineering company into solutions provider in renewable fuels and chemicals is playing out well for Praj. Going forward the company shall significantly benefit from opportunities in first-generation ethanol (1G), cellulosic ethanol (2G), bio-CNG and renewable chemicals and materials (RCM) supported by strong government commitment, Kumar added.

Praj Industries posted a net profit of Rs22 crore in the quarter ended June as against reporting a net loss of Rs10.5 crore in the corresponding quarter of the previous fiscal. The company's revenue from operations witnessed a significant growth to Rs386 crore from Rs129.5 crore during the same quarter last year.