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Centrum Broking Report
Praj Industries Ltd. reported its Q2 FY24 consolidated numbers which are lower than our estimates on revenue front but margin was substantial to post healthy earnings growth (+30%). The company posted YoY growth of 1% at Rs 8824 million versus (our estimate Rs 9850 million).
During the quarter, Praj Industries encountered challenges in execution due to the suspension of new customer acquisitions and the temporary halt of under-construction projects, mainly as a result of the FCI embargo, which disrupted operations for a few weeks.
Gross margins for the quarter improved and came in at 43.5 - a YoY/QoQ improvement of +880/320 bps. On the consolidated Ebitda margins print came in at 9.5% (versus 7.7% in Q2 FY23) in line with our estimates of 9.6% inspite of revenue disappointment.
We believe Praj is currently progressing towards its desired growth trajectory, with a strategic emphasis on securing high-margin international orders.
This approach is expected to further enhance the company's position and profitability.
We retain 'Add' rating with a revised target price of Rs 601 (target price Rs 535) based on 30 times H1 FY26E earnings per share.
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