Author- Prajwal Shetty
Introduction of the company-Praj Industries Ltd is a prominent biofuel technology company that offers a variety of ethanol and biodiesel production processes and systems. Praj Industries Limited, headquartered in Pune, Maharashtra, India, is a process and project engineering firm with offices in South Africa, North America, Latin America and the Caribbean, Thailand, and the Philippines. Praj Industries is an ethanol-based corporation with a long history of successful trading. Praj Industries Ltd. aspires to be a “string of pearls” business with many revenue streams. The company sees all of its industries contributing, from ethanol and bioenergy to wastewater treatment. Praj was established in 1983. The Bombay Stock Exchange and the National Stock Exchange of India both list the firm, which went public in 1994. In 1987, ICICI Bank provided Praj with its first round of venture capital. Today, it has investors such as Vinod Khosla, a venture capitalist with a 10% ownership, and Marubeni Corporation. Parimal Chaudhari manages the Praj Foundation, which was founded in 2005 as the company’s CSR arm. The company’s business sectors include Alcohol Plants—for the manufacturing of alcohol, the company has Developed HIFERM fermentation systems, which are designed to handle a wide range of raw materials. Praj Industries is a high-tech, tech-savvy operator in the ethanol blending equipment industry, where it has a dominant position and a strong order book worth Rs 650 crore. The company has grown tremendously in the last year, with multiple projects under way and several new ventures. Even after reaching a 52-week high, the
Praj industries don’t seem to be slowing down. Praj Industries’ rapid expansion over the course of a year has piqued my interest. Praj industries LTD has delivered more than 600 per cent returns to its shareholders in the last 12 months (from May 19 2020 till may 19 2021). It was trading around Rs 59 back in May 2019 and since then stock has just seen an uptrend with few corrections and profit booking. On Jun 8 2021, the stock had risen to Rs. 407. Currently the stock is trading at 378.35.
Objectives – To find beta value of Praj industries and its significance
View and Reviews:
• Praj Industries Ltd has added 36.88% over last one month compared to 11.69% gain in S&P BSE India Infrastructure index and 7.57% rise in the SENSEX- Business Standards
• The country’s aggressive targets to blend 20% ethanol with petrol by 2025 has received a boost with an innovative solution from Praj Industries, which enables round-the-year ethanol production.- Financial Express
• Praj Industries Consolidated December 2021 Net Sales at Rs 585.64 crore, up 68.39%- Moneycontrol
Data Analysis: Y^= 0.014193+ 1.485955X
Where X= Praj Industries
In the data, n= 46; R^2= 0.165952; F-stat= 8.754753
The above regression equation tells us the relationship between X and Y, where Y= Praj Industries and X= Nifty 50 prices.
The positive sign tells us there is direct relationship between them, if the price rises of Nifty 50 then the price of Voltas Limited also rises and vice versa.
From the equation, it can be seen if X rises by 1 unit, Y will also rise by 1.485955 units (t-stat for b= 2.958843).
The figure in bracket is t-stat for b, which is more than the table value (2.571), which implies that b is statistically significant at 5% level.
R^2 is 0.165952 which means 16.59% of Y is explained by X and the balance is error.
F= 8.754753 which is more than the table value, which means overall the model is statistically significant at 5% level.
Conclusion:
Based on the research methodology and data analysis performed we can conclude that only 16.59% of Praj Industries can be explained by Nifty 50 and the remaining is attributed to the fundamentals and the policies of Praj Industries.
Since F value is greater than the table value, b value is significant. The model can be relied upon to analyse the risk factors and the analysis can depend on this model.