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Target: ₹500
CMP: ₹387.60
Praj Industries reported a strong set of numbers in Q4FY23, beating our estimates on all fronts. The company reported revenue of ₹1,004 crore (up 21 per cent/10 per cent year on year/quarter on quarter). Its EBITDA stood at ₹105 crore, reporting a significant increase of 41 per cent/21.5 per cent on a y-o-y/q-o-q basis as its EBITDA Margin improved to 10.4 per cent from 9.5 per cent/9 per cent in Q3FY23/Q4FY22 vs. our expectation of 10.2 per cent.
Praj Industries is now marching its footprints globally. The company has also a very strong focus on Engineering Business, providing solutions across CPES, ZLD, and ETP segments which cater to a growing industry. This bolsters our confidence in the company’s growth prospects.
We believe that the transition towards cleaner forms of energy is the only sustainable way to grow and this will attract major global investments in the coming years as global environmental issues create challenges for normal human survival. Praj Industries is one of the most pure-play investment strategies.
We increase the company’s FY24/25 EBITDA estimates to factor in higher margins from new projects, increased share of exports, and softening of raw material prices helping in stabilising margins. Also, the management’s focus on growth with healthy margins and an increase in service segment revenues to support better margins.
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