Praj Industries Limited (PIL) incorporated on in 1985 isa leading biotechnology and engineering company globally. It offers sustainable solutions in bioenergy, water purification, process equipment, breweries, and wastewater treatment with focus on the environment, energy and farm-to-fuel technology solution. It delivers know how, license, engineering design, plant & equipment, project management, commissioning and customer care and turnkey projects.It caters to both domestic and international markets and further provides design and engineering services. It has 4 major business segments such as

1. High Purity Solutions- where it provides Water Systems, Modular Process Systems and Value-Added Services.
2. Engineering Businesses - where it provides solutions for Critical process equipment & Modularization,GenX, Brewery and beverages and Zero Liquid Discharge.
3. Bio Energy – Where it develops 1G & 2G Ethanol Plants Compressed Bio-Gas Future Fuel: SAF, Marine Biofuel, Bio Hydrogen etc.
4. R&D – where it undertakes Customized Research Services & Solutions and BioPrism® which is for Renewable Chemicals and Materials.

It has 40 years of legacy with presence across 100+ countries with Global Offices located in Thailand and Philippines in South East Asia and in Houston, Texas, USA.It has 4 manufacturing facilities located in Gujarat, Maharashtra and Karnataka with 1800+ employess and 90+ research scientists. It has 10% market share in Global ethanol production market share backed by 400+ patents, 1000++ References/plants worldwide and 400+ overseas references.

Company has entered into various partnerships for various purposes

Company generates 40% of its revenue from repeat customers and its 3-Year Revenue CAGR was 39%, 3-Year EBITDA CAGR was 51% and 3-Year PAT CAGR was 52%. Company’s Order intake for Q1Fy25 stood at INR 8880 Mn with 58% contribution from Domestic orders and 42% contribution from international orders. Company’s order books stand at INR 40, 440 Mn with 67% contribution from Domestic orders and 33% contribution from International orders.

Fundamentals (FY24 - 25):

Financial Results:

Company has reported Net Sales of Rs 699.14 crore in June 2024, down by 5.1% from Rs. 736.72 crore in June 2023.

Its Quarterly Net Profit was at Rs. 84.18 crore in June 2024 up 43.52% from Rs.58.65 crore in June 2023.

Company’s EBITDA stands at Rs. 103.96 crore in June 2024 up 18.66% from Rs. 87.61 crore in June 2023.

Praj Industries EPS has increased to Rs. 4.58 in June 2024 from Rs. 3.19 in June 2023.

List of recent updatesregarding the company:

Praj has successfully produced the first batch Lactic Acid 90%, a building block for bioplastic, at itsState-of-the-art demonstration plant for BioPolymers in Jejuri near Pune.

Praj has also established a Centre of Excellence & Innovation (CoEI) with Vasantdada Sugar Institute forthe Integration of Farm to fuel model with alternate feedstock development

It was recently Ranked 1st in list of 50 Hottest companies in the Bio-economy for 2024.

Axens and Praj have signed a Memorandum of Understanding to work jointly on projects in India for production of Sustainable Aviation Fuel (SAF) from low carbon alcohols through Alcohol-to-Jet (ATJ) pathway.The ASTM approved ATJ pathway (ATJ-SPK) involving conversion of low-carbon ethanol or low-carbon isobutanol into SAF will play a major role in meeting India’s requirement of SAF production.

AirAsia India flight i5-767 departed from Pune to New Delhi using a blend of indigenous Sustainable Aviation Fuel (SAF) supplied by Indian Oil Corporation Ltd. (IOCL) in partnership with Praj Industries Ltd. (Praj).In a significant development in the decarbonization of the aviation sector, India’s first commercial passenger flight using an indigenously produced Sustainable Aviation Fuel (SAF) blend was successfully flown few days ago.

Indian Oil Corporation Limited (IndianOil) and Praj Industries Limited (Praj) 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.

Praj joins International Alliance to Pursuit Net Zero Aviation. It has joined the elite league of more than 60 industry leaders and major aviation companies around the globe that includes among others Microsoft, Air France, Boeing, etc. By endorsing MPP’s report, they have reiterated the shared vision of low-carbon air transportation. The report outlines the transition strategy for the aviation sector to achieve net-zero emissions by 2050. Praj, with its groundbreaking Sustainable Aviation Fuel technology. The Mission Possible Partnership (MPP) is an alliance of climate leaders led by the Energy Transitions Commission (ETC), Rocky Mountain Institute (RMI), the We Mean Business coalition (WMBC), and the World Economic Forum (WEF). Praj has been working closely with MPP in helping formulate an energy transition strategy aimed at cleaner skies.

Praj Industries has bagged an order to set up India's largest capacity syrup-based ethanol plant from Godavari Biorefineries (GBL) in Karnataka. As a part of this project, Praj Industries will expand the existing ethanol manufacturing capacity to 600 kilo liter per day (KLPD), using sugarcane syrup.

Company signed a Memorandum of Understanding (MoU) with Egyptian Sugar and Integrated Industries Company (ESIIC) of Egypt. As a part of this MoU, Praj and ESIIC will develop infrastructure, help formulate policy framework, and create awareness to mainstream bioeconomy in Egypt. They will set up 1st and 2nd Generation ethanol projects in Egypt.

Company in collaboration with the Pune-based Automotive Research Association of India (ARAI), is developing a binder that will help blend ethanol with diesel.

Praj Industries has also started work on developing biohydrogen technologywhich is the emerging sector and Green Hydrogen is going to be the fuel of future. Government of India has also announced 19000 crore investments for fast tracking of Green Hydrogen production and its related segments from which Praj Industries will get benefitted.

In the pursuit of low carbon economy, Praj is also developing sustainable solutions in the form of Renewable Chemicals and Materials (RCM). To curb evils of plastic menace and to support government of India’s single use ban on plastic Praj has developed technology to produce bioplastics i.e. Polylactic Acid (PLA) as part of its Bio-PrismTM portfolio. To accelerate commercialization of bioplastics, Praj has also setup first of its kind demo plant for Polylactic Acid (PLA) at Jejuri in the outskirts of Pune. This pilot facility will be used for scaled production of Food Grade Lactic Acid and Polylactic Acid.

Company is also addressing the growing opportunity basket from Energy Transition and Climate Actions (ETCA) agenda by setting up most modern manufacturing facility to be housed into a new subsidiary. The new facility will be setup near a major port with an investment of Rs. 100 crores. The existing Kandla facility will continue to serve the current market of Oil & Gas and Fertilizers while new facility will be dedicated to opportunities from the ETCA segment.

In past three year the stock has given a return of 131.59%as compared to rise in Sensex and Nifty in same period. Mutual Fund Holding also increased by 2.3% in the last quarter to 15.31.

Recently, Indian food minister Pralhad Joshi has said that the centre is considering the industry's demand of hiking the minimum selling price (MSP) of sugar from the current level of Rs 31 per kg, along with ethanol prices and with the target of 20 per cent ethanol blend with petrol on track, the food ministry has now approached the NITI Aayog to prepare a road map for 25 per cent blending which will also give boost to Ethanol producing companies. The Global Cellulosic Ethanol Market Size Was Valued at USD 1097.62 Million in 2021 and is Expected to Expand at a CAGR of 31.21% and Reaching USD 5600.05 Million By 2027.The company is expected to grow higher driven by increase in demand for sustainable solutions for bioenergy along with thecompany’s expansion in new areas like sustainable aviation fuel technology, Green Hydrogen, Ethanol and biochemicals.

ANALYST-HET ZAVERI                                                

info@smartinvestment.in