Reviews

In this edition, we have reviewed Grauer & Weil (India) Ltd. and Praj Industries Ltd. We suggest our readerinvestors to HOLD Grauer & Weil (India) Ltd. and Praj Industries Ltd. 

We had recommended Grauer & Weil (India) Ltd. in Volume 39, Issue No. 19 dated August 12, 2024—August 25, 2024, in the ‘Low Price’ segment. The recommended price for the stock was ₹86.65. We had recommended the stock on the basis of the company’s strong fundamentals, increasing demand, and strong liquidity. Grauer & Weil (India) Ltd. is a leading metal finishing house globally, offering an integrated package of chemicals, plants, effluent treatment systems, and waste recovery techniques. It has established a strong leadership position in India, with numerous firsts in the industry, both academically and in applied sciences. 

In Q3FY25, on a consolidated basis, the company’s revenue decreased by 3.59 per cent YoY to ₹274.8 crore compared to ₹285.03 crore from the previous year’s same quarter. On a sequential basis, its revenue increased by 7.9 per cent. The net profit stood at ₹43.12 crore compared to ₹42.75 crore, a YoY increase of 0.87 per cent, while sequentially it increased by 14.65 per cent from ₹37.61 crore. At TTM, the company’s shares are trading at a PE of 25.7 times, which is lower than its industry PE of 28.4 times. If we look at its PBV, it is currently at 4.75 times, which is higher than the industry PBV of 2.92 times. 

The company has a three-year average return on equity (ROE) of 17.5 per cent and a return on capital employed (ROCE) of 22.9 per cent. It has posted three-year compounded sales and profit growth of 21 per cent and 30 per cent, respectively. The company is expected to experience steady growth due to its diversification and expansion plans. It plans to invest around ₹176 crore in decorative paints, a research and development centre, and electroplating chemicals production to improve operational efficiency and product offerings. The establishment of a branch office in Dubai is also expected to capitalise on opportunities in the MENA region. 

The surface finishing segment is expected to grow due to continued demand from the automotive sector. The engineering division is expected to continue improving order execution and increasing revenue. GWIL’s operating margin has shown significant improvement due to factors like softening raw material prices, and its strong liquidity and capital structure ensures flexibility for future investments. The company’s market position and product diversification will help maintain market share and attract new customers. Hence, we recommend HOLD. 

We had recommended Praj Industries Ltd. in Volume 39, Issue No. 19 dated August 12, 2024—August 25, 2024, in the ‘Analysis’ segment. The recommended price for the stock was ₹678. We had recommended the stock on the basis of the company’s new product development, healthy business growth, and strong orderbook. Established in 1984, Praj Industries is a leading biofuel technology company that offers a range of processes and systems for ethanol and biodiesel productions. With over 600 references in over 60 countries across five continents, Praj Industries has gained an international reputation for responsible and reliable solutions. 

The company’s business includes alcohol plants, where it has developed HIFERM fermentation systems for handling various raw materials and wastewater treatment systems. 

In Q3FY25, on a consolidated basis, its revenue increased by 2.95 per cent YoY to ₹853.03 crore compared to ₹828.62 crore from the previous year’s same quarter. On a sequential basis, its revenue increased by 4.51 per cent. The PBIDT excluding other income decreased by 25.46 per cent to ₹72.71 crore YoY as compared to ₹97.55 crore from the previous year’s same quarter, while sequentially it decreased by 15.66 per cent. The net profit stood at ₹41.1 crore compared to ₹70.41 crore, a YoY decrease of 41.63 per cent, while sequentially it decreased by 23.64 per cent from ₹53.83 crore. 

At TTM, the company’s shares are trading at a PE of 38.1 times, which is higher than its industry PE of 32.3 times. If we look at its PBV, it is currently at 7.30 times, which is higher than the industry PBV of 3.54 times. The company has a three-year average return on equity (ROE) of 21.7 per cent and a return on capital employed (ROCE) of 27.7 per cent. It has posted three-year compounded sales and profit growth of 39 per cent and 50 per cent, respectively. The company aims for a threefold increase in top-line revenue and a fivefold increase in bottom-line profit by FY30. It is enhancing value through core product development, including biobitumen, corn oil, and rice protein. The company has won a significant contract from Tanzania for setting up an ENA plant based on sugary feedstock. The service business shows healthy growth, with order book and revenue from both domestic and international markets up 80 per cent compared to the previous year. 

The company is optimistic about long-term goals, citing a strong inquiry pipeline in international bioenergy markets and focusing on enhancing margins through technological innovations and co-product developments. Hence, we recommend HOLD. 

(Closing price as of April 01, 2025)