NSE:

Monday, December 20, 2010

PRAJ Industries Ltd : A Value BUY!!!!

Scrip Code: 522205 / PRAJIND
CMP: Rs. 70.60; Buy at Rs. 68 - 70 levels
Target: Rs. 76.00
Market Cap: Rs. 1304.25 cr.
52 Week High-Low: Rs. 113/Rs. 63.90
Total Shares: 18,47,38,492 shares; Promoters – 4,21,06,432 shares – 22.77 %;
Total Public holding – 6,52,37,191 shares – 35.31 %
Book Value: Rs. 28.82; Face Value - Rs. 2.00; EPS - Rs. 3.69; Div – 72.00 %.
P/E – 19.08 times; Ind P/E – 23.98; EV/EBITDA: 9.73
Total Debt – ZERO; Enterprise Value: Rs. 70.50 per share;
FAIR VALUE – Rs. 77.00 per share.

PRAJ INDUSTRIES -  A global green technology provider,an Ethanol manufacturer, A ZERO DEBT company, having a confirmed order-book of Rs 600cr to be executed over 12-14 months period. Offers a very good Value buying opportunity. US senate has passed the law making 15% ethanol mixing mandatory for Oil companies. This move by US will create demand for additional bio refinery capacity of approx 4 Bn gallons per annum. Capex required would be of  $ 1.75 for each gallon of bio refinery capacity created. Thus this move will be an business opportunity of USD 7-8 Bn for Praj Industries. Company have started receiving enquiries for the same. US has promoted this law for employment generation in this business. Praj will be able to win good chunk of this business.
Management has decided to restructure its business plans. Accordingly the company has the current structure of Plant & Equipment for Ethanol and Breweries; Consultancy services to brewery & Ethanol industries.
Company will be entering into newer business lines to capitalize on its domain expertise –
Water and waste water treatment: The Company has already started with 50 man team for this business unit. The team comprises of people with relevant experience in the field. Praj has hired AT Kerney for detailed business plan and the consultant will be handing over the same to the management in next 1-1/2 month. The company has won small order in water and waste water treatment space Kerney. As per the estimates current market size in India for water and waste water treatment business is to the tune of USD 1.7 Bn per annum.
Customised Engineering and manufacturing: Company’s facilities are approved by key customers like General Electric Inc and Cargill and all their global units can source their requirement from Praj. The company has won a small order in this segment as well. The key thing to be noted here is that there are huge untapped opportunities both domestically & globally and estimated market per annum to the tune of USD 3.5Bn to USD 4 Bn. Key players in this space are L&T, Godrej & Boyce. Praj’s advantage is in customization of equipment as per clients specification. To tap this opportunity, company is erecting a new facility near Satara Road, approx 30 Km from Pune and they have facility at Kandla SEZ as well. They will be serving overseas market from Kandla facility while domestic market will be serviced from Satara facility. Their Kandla facility has been approved by GE Power, GE Oil, Cargil etc and they have registered themselves with 50 companies and are qualified to supply plants and equipments to them. Company will be spending approx Rs 100 cr to set up Satara facility.

Valuation &amp:
At the CMP of Rs 70.60, Praj is trading at 19.28 x FY11e EPS of Rs 3.66 and 9.67 FY12e EPS of Rs 7.30 which looks very attractive.
The Value of Praj at 15x FY12e EPS of Rs 7.72, gives the target price of Rs 116, an upside of 63%.

Mr. Promod Chaudhari (Promoter) has bought 14,73,379 shares from market on 25th & 26th November 2010 at an Avg price of Rs. 69.27 per share.
Ms. Parimal Chaudhari (Non Executive Director) has bought 3,25,050 shares from market on 9th & 10th of December 2010 at an avg.price of Rs.69 per share.
Mr. Promod Chaudhari lastly bought 4,34,200 shares from the open market on 9th & 10th December at an avg. price of Rs. 69.27 per share totaling to Rs. 3,00,77,627.45
As on 13th December 2010 – Mr. Chaudhari holds 3,15,00,000 shares 17.05%

8 comments :

  1. Great Work Bhavikk!!

    I am new to Share Market. I've lost money doing intra day trading. How do u find out the the Fair Value of a stock? It will be great if you can help me with this.

    Thanks,
    Sanjay

    ReplyDelete
  2. Hi Sanjay
    Thanks for reading my blog..
    I will certinly tell you just drop in ur email & i will surely revert back to u..
    till then HAPPY HOLIDAYS...
    http://bhavikkshah.blogspot.com/

    ReplyDelete
  3. Hey Bhavikk,

    Wish you a happy and a prosperous new year!
    My email id is sanjaymeena@gmail.com

    Regards,
    Sanjay

    ReplyDelete
  4. Hey Bhavikk,

    I am working in one of the financial firm Geodesic,
    I have tried analysing many stock bt din came out with some concreate itenerary to identify good stocks.
    I have even tried to read ADX and MACD charts.
    If tou can help me with some of your techniques then it would be of real help to me.
    email id:spikemihir2002@gmail.com

    Regards,
    Mihir Kamdar

    ReplyDelete
  5. HI BHAVIKK
    JUST for your info that Mr. Shashank Inamdar, Non-executive additional director of the Company has resigned from the Board of Directors of the Company with effect from February 03, 2011. He co-founded Praj over 24 years ago.

    ReplyDelete
  6. Hi yesterday on 24-FEB-2011,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SOLD 9,87,799 sh of PRAJ IND @Rs.65.69.
    I got this information from the List of live news section of your blog..thnks buddy

    ReplyDelete
  7. HI READERS !
    AN UPDATE ON PRAJ INDA
    As per BSE and NSE data Rakesh Jhunjhunwala hiked stake in the company at June-end. He bought 12.5 lakh shares, he currently holds 8.8% stake in the company.
    Buying by big bull surely improves Praj's future prospects...

    ReplyDelete
  8. HI FRIENDS !
    AN UPDATE ON PRAJ IND -
    Praj Industries - Board approves Buy-Back of Shares
    Praj Industries Ltd has informed BSE that the Board of Directors of the Company at its meeting held on December 03, 2011, has approved a Buy-back of its outstanding equity shares of face value Rs. 2/- (Rupees Two only) each for an aggregate amount of up to Rs. 55.8639 Cr at a price not exceeding Rs. 90/- (Rupees Ninety only) per equity share. The Buy-back will be made from the open market through the Stock Exchanges. Praj Ind can buy back upto 62,07,100 shares or 3.35 %

    ReplyDelete

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