PL Stock Update - *Praj and Indian Oil corporation ltd. (IOCL) to form JV for building Biofuels production capacities in India*

PL Stock Update - *Praj and Indian Oil corporation ltd. (IOCL) to form JV for building Biofuels production capacities in India* – *Amit Anwani – Research Analyst, Prabhudas Lilladher Pvt Ltd*

Praj and IOCL signed a term sheet to advance plans to strengthen biofuels production capacities in India. Various biofuels covered under this MoU include Sustainable Aviation Fuel (SAF), Ethanol, Compressed Bio-Gas (CBG), Biodiesel and Bio-bitumen among others. Earlier in October 2021, both the Companies had entered into an agreement to form a 50:50 Joint Venture to this end.

PL view

IndianOil & Praj have been collaborating to facilitate India’s energy transition towards a greener future in the past as well. We believe this developement is positive for Praj and SAF, CBG, Biodiesel to be next growth driver for Praj in medium to long run. We believe PRJ is well poised to benefit from upcoming opportunities given 1) its strong leadership in domestic ethanol plants (~50% market share), 2) global presence and 3) focus on future-ready technologies like 2G plants, Compressed Bio Gas (CBG), ECTA, SAF etc. The stock is currently trading at PE of 24.4x/22.6x FY24/25E. We have Buy rating on stock with TP of Rs 475.