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Stock analysis-Praj Industries
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My First question,” Will you trust a company in which Tata’s have invested?” If your answer if yes then Praj is that company.
Praj Industries promoter Pramod Chaudhari has sold 8% stake to Tata Sons. The sale was via a block deal of 1.36 crore shares. Sources added that members of Tata Sons will be on the board of Praj Industries.
Tata’s picked up the stock at Rs 252 per share. At todays closing price of Rs.175 you can buy it at less than two thirds of that price.
Is that the only reason why I picked up the stock? The answer is a BIG NO! Its not that I do not trust TATA’s, its just that I trust my own research more .
The company is engaged in the design, manufacture, supply and commissioning of fermentation and distillation equipments for the manufacture of ethanol.The largest single use of ethanol is as a motor fuel and fuel additive. The largest national fuel ethanol industries exist in Brazil (gasoline sold in Brazil contains at least 20% ethanol and anhydrous ethanol is also used as fuel). With the oil prices at all time high , does that ring a bell!
Brazilian connection:
Praj recently announced its entry into the Brazilian ethanol equipment market through a JV with Jaragua Equipments (54% share for Praj). This move is a step to increase its business size as Brazil is the second largest market for ethanol equipment suppliers. The Brazilian ethanol market is growing at 25-30% each year due to increasing demand for fuel ethanol
U S connection:
Praj has acquired the Omaha-based CJ Schneider Engineering Corporation Inc, with expertise and experience in providing detailed engineering services to the bio-fuel industry including ethanol plants, in a Rs 22.5-crore deal.
CJS already has contracts on hand from leading ethanol producers for supply of various services, a statement released here on Tuesday said, adding the wholly owned US subsidiary will complement Praj’s own business in the US.
This acquisition will benefit the US customers to get a wider range of services and the company expects enhanced business potential as a result, the statement said. CJ Schneider employs highly experienced engineering professionals with a collective experience of over 350 man-years, the statement added.
The company has been contracted to supply technology and machinery for seven ethanol plants in the country within six month of its entry into US market.
Praj Industries has announced a joint venture with engineering and construction company Aker Kvaerner.
Praj has developed the bio-diesel technology in house.They are investing in a world class R & D facility, near their Engineering Center and Corporate Office in Pune. The facility will churn out cutting edge solutions for application of industrial bio-tech
It is dividend paying company. Praj Industries Ltd has declared interim dividend of Rs 1.98 per share (99%) for the financial year 2007-2008.
The company is in a cutting edge field the demand for which is going to grow as the world oil reserves are limited and people are becoming more aware of the environment.
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