Multibagger alert: Investment of Rs 1 lakh in this sugar stock would have turned to Rs 3.25 lakh in just one year!

This stock, which was trading at Rs 99.3 on 8 December 2020, closed at Rs 323.5 yesterday, on 7 December 2021.

Praj Industries Ltd, which is India’s one of the most accomplished industrial biotechnology companies with global footprints, has turned into a multibagger by delivering astonishing returns of 225% in the last one year!

Over the past three decades, the company has focused on the environment, energy, and agri-process industry, with nearly 750 customer references spanning 75 countries across 5 continents. Its diverse portfolio consists of bio-energy solutions, high purity water systems, breweries, critical process equipment and skids and zero liquid discharge systems, brewery plants, water & wastewater systems.

What worked for the company?

On the policy front, the preponement of 20% EBP (ethanol blending program) from 2030 to 2025 by the government has created a demand for an additional capacity of 1000 crore litres of ethanol. The company estimates an ethanol production of 332 crore litres to be blended in ESY 2020-21 as against 173 crore litres last year. From October 2021 onwards, incentives to the sugar industry have doubled and it has encouraged ethanol production from B-heavy molasses, sugarcane juice, sugar syrup. During the quarter, the company reported decent order inflows of Rs 745 crore, taking the order backlog to Rs 2,235 crore. This provides good revenue visibility in the upcoming quarters.

Looking at the financial highlights for the recently concluded quarter Q2FY22, the consolidated net revenue stood at Rs 532.41 crore delivering growth of 104.58% as against Rs 260.24 crore in Q2FY21. The EBITDA (ex OI) for the quarter grew by 165.17% YoY and stood at Rs 42.56 crore as against Rs 16.05 crore in the corresponding quarter last year. The EBITDA margin for the quarter under review stood at 9.9%, as against 8.4% in Q2FY21. The PAT increased by 192.71% YoY to Rs 33.34 crore as against Rs 11.39 crore in Q2FY21. The margin expansion and rise in profit was a result of increased revenue and a comparatively slower increase in expenses.

Yesterday, after the market hours, the company announced that it has developed an innovative solution to process sugarcane juice into a new sustainable feedstock BIOSYRUP for round the year ethanol production. The solution has been validated and certified by Vasantdada Sugar Institute (VSI)- India’s premier sugar research institution.

Reacting to this development, at 11.58 am, the share price of Praj Industries Ltd was trading at Rs 337, which was an increase of 4.17% from the previous day’s closing price of Rs 323.5 on BSE.