PRAJ INDS – Future Leader in Ethanol

Praj Inds Business has 3 segments

1️⃣ BIO ENERGY

🔅1G (leaders with 60-65% market share) 2G Bio Ethanol, CBG, Bio-diesel, Aviation fuel.

🔅Company has Four manufacturing facility + 1 R&D center.

🔅Expecting segment revenue CAGR at 31% over FY22-25.

🔅71% Revenues are generated from this.1G Bio ethanol is produced from sugar containing materials like sugar cane juice.

🔅We all know about the Ethanol blending policy so I’m not going to waste your time in that. But, we’ll discover the opportunities beyond ethanol blending.

🔅PRAJ INDS commissioned Asia’s first 2G Ethanol Bio-Refinery. 2G is ethanol procurement from non-food feedstocks such as Agri-residues. This process produces lots of by products which have huge industrial applications (Additional income).

🔅PRAJ Inds developed RENGAS which produces low cost  CBG from multi feedstock like agri & other organic waste for autos.PRAJ is working towards ethanol blending in diesel.

🔅PRAJ Inds got approved from Indian Air Force to product Sustainable Aviation Fuel & Premium gasoline.

2️⃣ ENGINEERING

🔅Brewery plants, CPES, Water & Wastewater treatment.

🔅In Brewery plants, company enjoys 70% market share in India & has established presence in the markets of Africa & South Asia too.

🔅Expect 18% segment revenue CAGR over FY22-25.

3️⃣ HI PURITY SYSTEM

🔅Provides value & end-to-end integrated solutions to Pharma, Biotech & Wellness Industry like water treatment, modular process, ozone & combi test kits, electro polishing, on-site training etc.

🔅Expect 19% segment revenue CAGR over FY22-25.

MANAGEMENT AT PRAJ INDS ;

🔅Pramod Chaudhari, Executive chairman, IIT Bombay & Harvard business school alumnus.

🔅Shishir Joshipura, CEO & Managing Director, BITS Pilani & Harvard business school alumnus. Has 35 years of rich experience.He has served at Thermax & SKF India in the past.

FUTURE EXPECTATION & ITS TAILWIND:

🔅Increased focus & traction in other verticals like HiPurity, ZLD, CPES to support growth momentum.

🔅Better fixed cost absorption going ahead, backed by healthy balance sheet with 0 debt.

🔅Sugarcane & sugar alone won’t be able to meet target so ethanol is being produced from feed stocks such as cereals.

🔅Preponed ethanol blending target to 2025 from 2030 & promoting CBG.

🔅PSU are setting Twelve 2G bio-refineries & PRAJ has bagged orders to setup three out of 12.

FUTURE GROWTH EXPECTED :

Expect Revenue CAGR of 17% over FY22-25.

Expect PAT CAGR of 29% over FY22-25.

Expect EBITDA margin to expand going ahead to 11.2% by FY25.

Expected ROCE to reach 23.9% by FY25.

KEY RISK FACTORS :

1️⃣Change in government policies Ethanol production can impact profitability & capex addition.

2️⃣Delay in pickup of tendering activities in its EPC business could result in lower order inflow from the segment.Any slowdown or policy change in exports markets could affect company’s overall performance & Major fluctuations in exchange rates could impact profitability.

Disc – All views expressed are personal and only for educational and study purpose. Consult your financial advisor before investing or taking any position based on above article.