Buy Praj Industries, target Rs 150: Phillip Capital (India)

Phillip Capital (India) has a buy call on Praj Industries with a target price of Rs 150.

The current market price of Praj Industries is Rs 130.70.

Time period given by the brokerage is one year when Praj Industries price can reach the defined target.


Investment rationale by the brokerage: At the current market price, the stock trades at 17.3x our FY21 earnings and at a FY19 P/BV of 3.1x. We believe traction in 1G and 2G orders will support growth over the next two years. With its leadership in biofuel technology, PRJ is likely to benefit from upcoming opportunities in ethanol blending and Bio-CNG. Our order inflow estimates are conservative, which can provide upside to our FY21 revenue estimates. We maintain FY19/20 earnings estimates and raise FY21 marginally by 3 per cent. We estimate revenue and earnings growth of 20 per cent and 65 per cent over FY18-21 from a low base, and value Praj at 20x FY21 with a target of Rs 150 (Rs 145 earlier at 20x FY20).