FINANCE & STOCK ADVICE: My View On Praj Industries

About The Company

Praj Industries is a global Indian company that offers innovative solutions to significantly add value in bio-ethanol, bio-diesel and brewery plants and related wastewater treatment systems.

The company is engaged in the design, manufacture, supply and commissioning of fermentation and distillation equipments for the manufacture of ethanol. The company was promoted by Pramond Chaudhari in 1985. The company's plant is located at Bhosari, Pune (Maharastra). PIL came out with a public issue of Rs.6.20 crore in January 1994. PIL manufactures plate head exchangers in collaboration with REHEAT, Sweden. The company sells its product under the name, 'HIFLUX' and solvent recovery systems under the brand name 'Ecofine'. The company also manufactures pressure fermentation breweries in collaboration with Dab Brav Consult Gmbh, Germany. The company has a market share of 60 per cent and is the market leader in ethanol plant and equipment manufacture. The company, in collaboration with Vogellbusch Gmbh, Austria, introduced cascade continuous fermentation process, for the first time in India. PIL has promoted a subsidiary in Singapore, Praj Far East Pte Ltd, for export of design and engineering services and industrial products to the South East Asian countries. The company plans to expand its manufacturing facilities near Pune.

About The Results

The company has posted results for the third quarter ended 31^st Dec 2008, net income from operations increased by 16% at Rs 210.05 crore. EBIDTA margins sustained at 22% of sales. The company posted a forex gain of Rs.9.69 crore on account of restatement of advances received in foreign currency from customers against orders placed by them. PAT was up 20% at Rs.47.31 crore.

The Company has raised Rs 117.05 crore in June 2007 through preferential allotment of equity shares and warrants. Out of this, an amount of Rs.57.86 crore was deployed towards expansion of R & D and balance amount was deployed towards expansion of manufacturing facilities. Accordingly, the total amount stands fully utilised.

Its order book currently stands at around Rs.800 crore. Amongst the notable order received, were orders from Mexico, Thailand, Vietnam and India. Mexico recently mandated 10% blending of bioethanol. USA has pre-poned its Renewable Fuels targets from 2012 of 11 bln gallons to 2009. This move is expected to support the capacity build-up. EU Parliament adopted the Renewable Energy Directive which mandates 10% (by energy content) biofuels blending in all transport fuels by the year 2020. This entails additional 12-14 bln litres capacity for bioethanol. These two developments would go in favour of the company but would take quite some time to fructify.

In India, a year ago, when crude was ruling around $100 per barrel and the Govt was serious about making another 10% blending of ethanol compulsory from October 08’. Then the future prospects of the stock had looked very good. The fortunes of this company are closely linked with the increasing acceptance of ethanol-blended petrol and bio-fuels. Now with crude ruling around $40 per barrel and ethanol blending also postponed indefinitely, the going looks uphill for the company.

The only enticing aspect of the stock right now remains its shareholders – Rakesh Jhunjhunwala holds 8.47% stake, Tata Capital 7.32%, Vinod Khosla’s holding is down marginally from 6.15% in Q2FY09 to 5.95%. JM Financial which held 5.25% stake in first quarter, reduced its stake to 3.82% in Q2FY09 and now in Q3FY09 it has gone up to 4.17%.

About The Stock

Any fresh investment is not likely to be fruitful in short to medium term.

Disclaimer : I do not have any personal holding in this stock.

MULTI BAGGER STOCK GROUP

Some of my group's multi bagger picks during the rally were NMDC , MMTC , STC , Larsen ,Jindal Steel & Power , Unitech , BF Utilities , Jai Corporation , Walchand Nagar Industries, RNRL , Reliance Infra (Reliance Energy) etc.

I had been long associated with a corporate engaged in financial services , where with the assistance of specialized tools along with my special analysis as per some historical accepted theories of stock market like W. D. GANN's Theory , Elliot Wave Theory and others are used with reliable insider information of so called " operators" who play a major role to make a stock ,a Multi Bagger ,I do make my gem picks in this market.

I had been running my group , where the associated people get the reliable and most beneficial to get the unexpected return as seen in the above mentioned tips. Say for example the stock called MMTC had jumped from 2000 level to 56000 per share of historical price where the capital appreciated by 28 times in very short period with 2700% return on capital employed. Likewise in RNRL we started accumulating at RS 25 level from where we saw it moving at 250 level giving 10 times with 900% return.

These sort of return is helpful as ,

1. Handsome gain will make a jack to our capital.

2. Limited stocks trade , as daily trade could be avoided , which is more risky.

3. Long term capital gain , so no tax liability.

4. Whole income in white, which could be further deposited into fixed deposit to get assured monthly income later.

5. Strong income tax file without paying any taxes.

Our role here could be summarized as :

1. Giving tips to all registered member at proper time , when the stock is just about to take off, neither too early not too late.

2. Make sure investor do not gt stuck into it.

3. Recommend to exit when the operator is about to leave it.which is the most important work or else the whole accumulated and deemed profit will be washed away along with part of investment and will remain stuck for long - long period.


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My View On Praj Industries