Upside Of Upto 61% Visible From This Small Cap Stock

An analyst of Axis Securities did a coverage on speciality chemicals along with various sectors and came across a small cap company, Praj Industries Ltd, whose stock has potential to grow further. The analyst feels that the share price of the small cap company will reach a target price of Rs 550 per share. It is a chemical engineering company.

Praj Indutsries Limited is a small cap company that was formed in 1983 and it went public in 1994. It is engaged in the design, manufacture, supply and commissioning of fermentation and distillation equipments for the manufacture of ethanol.

It has a bouquet of sustainable solutions for bioenergy, high purity water, critical process equipment, breweries and industrial wastewater treatment. Headquartered in Pune, Praj has spread its presence across the globe with 1000++ References in 100+ countries across all 5 continents. It's current market capitalisation stands at Rs 6,516.30 crore.

In Q3FY23, its total income was down by 0.97% over previous quarter but was up by 47.18% over a year to Rs 812.56. Its profit after tax was down by 13.16% and 9.64% over previous year and the quarter respectively to Rs 55.95 crore.

According to the coverage report, "the specialty chemicals sector has been one of the sunrise sectors of the country. India has been gaining a global market share in this space by leveraging its capabilities and supply chain realignment from China to India. We believe Indian companies would gain further ground as companies reduce their dependence on China after the COVID-19 pandemic and shift their supply chains to India. Apart from the long-term supply chain shift theme, many specialty chemicals form a part of essentials and the facilities have started opening up post-lockdown relaxations. The decline in raw material prices would support margins and reduce working capital needs further. Overall, the Specialty Chemicals industry is likely to continue performing well in the medium term. Keeping this in perspective, we recommend an Over Weight stance on the sector."

Analyst of Axis Securities feels that Praj Industries is witnessing strong growth in its key segment and has suggested that the stock rice will go up by upto 61%. "Bioenergy in Domestic business, the overall demand-supply gap of Ethanol, increased interest in grain-based distilleries and decarbonization impetus is auguring well for Praj along with development in other key verticals such as CPS, ZLD & High Purity gaining traction. Praj is a key beneficiary of multiple tailwinds provided by the bio-economic revolution, giving strong growth &revenue visibility for the next 3-5 years. The company's key growth levers remain strong & therefore we maintain our BUY rating with a Target Price of Rs 550 valuing the company at 35x FY24E."

The current market price of Praj Indutsries Limited stock is Rs 354.70 per share, it is down by 1.55% on intraday basis. Its down by 4.1% in one year but it has grown whoppingly by 329.42% in three years.

Disclaimer:

The stock has been picked from the brokerage report of Axis Securities, Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.