If have the details on how to join investor call, kindly share.
Results are overall good but my observations are:
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Order intake during the quarter was 650 Cr as against 605 Cr in Q3. I was expecting order intake at least 20% higher on QOQ basis.
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Receivables have gone up from Rs 265 Cr to 375 Cr.
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Other Current liabilities have increased from Rs 159.62 Cr to Rs 334.15 Cr .
Disc Invested with 10% of my portfolio from levels of 75
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Praj Press release_Q4FY21
Very good results.
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Received Order to set up CBG Plant for HPCL.
- Praj is offering its state-of-the-art RenGas⢠process to produce CBG from rice straw
using proprietary microbe
- Praj is offering its state-of-the-art RenGas⢠process to produce CBG from rice straw
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To set up largest syrup to ethanol plant for Godawari Biorefineries.
-Praj will expand the existing ethanol manufacturing capacity to 600 KLPD, using sugarcane syrup. When commissioned, this will become Indiaâs largest capacity syrup based ethanol plant
⢠The expansion will maintain zero liquid discharge norms by deploying innovative technology -
Robust order pipeline.
*GOI decision to advance 20% blending of Ethanol from 2030 to 2025 augurs well for PRAJ Ind.
- Praj HiPurity making inroads in Pharma. Their innovation process to make 90% of chemicals which are derived from Fosssil based can be made from renewable resource such as Biomass is technological breakthrough.
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Operating margins can surprise on the upside due to operating leverage. In one of the concall, management mentioned they can clock Rs.2,000 Cr topline with incremental negligible cost as they have employees/human resources already lined up and they can outsource the manufacturing of ancillary equipment.
HiâŚDoes anyone have concall details ? I am unable to find it on the exchanges and companyâs website. Thanks.
They have only planned for an analyst call and not investor call hence the call is only to analyst community as per the note here https://www.bseindia.com/xml-data/corpfiling/AttachLive/633fc047-25bd-4477-910c-75cd02187aca.pdf
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This is what I got from somewhere
Conference call (7-May-2021) at 12.00 noon dial in : 022 6280 1141 /022 7115 8042
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Please advise if any body attended the Concall⌠Transcript ,audio etc
I have been going through the earnings call transcripts and other investor presentations, and the company is definitely in a sweet spot - monopolistic nature (in India) business with process excellence as the moat, and significant tailwinds ahead (blending ratio to increase).
One question I have been grappling with is - how do we assess the business 5-7 years from today once the incremental 1000 Cr litres of ethanol capacity gets set up? Will Prajâs order book get shrunk after that? Is the thesis that Praj will then start seeing orders from CBG, HiPurity etc. so that the revenue can grow further? Effectively, how do we assess the terminal value for this business?
(Praj is a bit similar to software business - you have an upfront license fee and then AMC fee. But in case of Praj, AMC is not a big component as per my understanding.)
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Praj has been a company which has failed to deliver for a very long period of time. If you go through the thread here itself, you can see that it has frustrated a lot of people over the years. The company was a market leader for long in the bio energy segment but PAT has hardly moved. The only saving grace is the NIL debt status. Has anything changed for the company or Is it at some inflection point after all these years of research in bioenergy? Letâs take a look.
- Govt has preponed its target date for 20% Ethanol blending from 2030 to 2025. Current blending is around 7 to 8 %, which gives an opportunity of about 14000 crores for the company in next 4 to 5 years. Company is having a 2/3rd market share in India. Inorder to achieve the set target India have to look to other to feedstocks other than sugar and molasses. The company already has an established technology in producing alcohol using grain based feedstocks( is operational in countries like UK). Last year sales were only 1305 crores so 14000 crores over 5 to 6 years is a huge opportunity.
- Company has been developing 2 g technology enfinity from 2016 onwards. There demo plant is live now and is developing 3 plants for OMCs now. As per the company it will be the only company building 3 plants simultaneously. The plant can work on agri waste and residue and can be a solution to the extensive stubble burning. However, the plant requires much more capex which may be a hindrance. It may require govt support / incentive/regulation to take off. However, the company is expecting good demand from Europe due to supporting regulations. As per the expectations Europe has a target of 15 % Ethanol blending and is in a discussion phase for regulation wherein the incremental blending should come from 2 G plants. As per the company its getting good enquiries from Nordic countries as well for production of ethanol from forest residues.
- The company has developed Rengas technology for production of CBG. Company has bagged order from HPCL for setting up of CBG plant from rice straw at Badaun UP. The company has signed a non-binding MOU with ministry of Petroleum and Natural gas with the objective to facilitate technological support to the entities for setting-up and commissioning of multiple number of eligible and qualified CBG Plants and their continuous operation for production of CBG and Organic Compost Manure under Sustainable Alternative Towards Affordable Transportation (SATAT). Under the SATAT initiative a 5,000 CBG plants are expected to be rolled out across India in a phased manner As per the company, CBG is having 10 % more calorific value than CNG. The company will use feedstocks such as agri residues and press mud. A gas plant may look at capex of around 50 cores. LOAs has been issued by OMCs. As per the company the CBG production is economically viable and maynot require govt subsidies to take off, however there may be a delay in getting a clear idea of the ecosystem after which we may see order inflows. As CBG can substitute CNG without any kind of modification( I donât see any reason why it wont get significant acceptance). Rengas technology is accepted to have significantly higher yield than existing technologies. As per the EOI floated by CGDs in 2019 the procurement rates were at 46 Rs/Kg to be delivered at CBD outlets. Clarity is yet to emerge on the logistics and guaranteed take off of production which may take another few quarters.
- GST on ethanol has helped easier transportation of ethanol from the producing states to other states. This will help in easier transportation of ethanol from major producing states like UP, Maharashtra and Karnataka. Also Govt has allowed production of ethanol from sugarcane juice and molasses B. Company has recently won an order from Godawari biorefineries for production of ethanol from syrup.
- Apart from biomobility the companyâs Praj Hipurity systems looks well poised to gain orders. It has an outstanding orderbook of 115 crores and has good reference from pharma majors like Pfizer, Sun Pharma, Alembic etc. Company may do well considering the capacity increase made by pharma majors in production of vaccines and complex injectables.
- Companyâs zero discharge business bagged an order for 206 crores from Indian Oil corporation. With regulations being more stringent this division can also expect some good orders.
- Even though the company is known as a major bio energy player, the company has never been able to make any significant foothold in the major ethanol/ bioeoconomy countries like US, Brazil and China where 80% of the worldâs ethanol/ bio energy business was taking place. The company is cognizant of this fact and is taking calculated actions in this direction.
US based Biofuels Digest has announced that Praj Industries of India is ranked 2nd in a list of worldâs 50 Hottest companies in global bioeconomy for 2021 in Low Carbon Fuels and Renewable Chemicals category. This list represents companies that have made outstanding contribution to bioeconomy by developing and deploying sustainable decarbonization solutions using innovative technologies that help preserve environment. Additionally, Praj has also secured 3rd ranking in the newly introduced Biodesign & Engineering category that recognizes hottest companies for their capabilities in innovations and services in commercial-scale operations and products. This is expected to help the company significantly in marketing their products in US.
Also Praj has an agreement with Dedini to market ethanol technologies in Brazil
This factors point to an inflection point for Praj. However, the second wave of covid may play spoilsport for the company. India with all the other countries in the world may be fully focused on controlling covid and environmental concerns and bioenergy may take backseat in terms of priority. The order inflow may also slow down for a couple of quarters. But Praj Hipurity may emerge as a saving grace as more and more companies may move to production of vaccines.
Dsicl: Invested and biased. Stock prices has more than doubled in the past 6 months. So be cautious if investing and this is not a recommendation
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@hitesh2710 Hitesh Sir, would like to know your view. Whether the future growth prospects have already been factored in the current rally. Is there still skepticism on its future growth prospects as investors in the past had been frustrated by its muted performance. I feel many investors have missed out the bus due to this skepticism during last 10 to 12 years.
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I guess the CMP of Rs.350 is justified if the company manages to make a diluted EPS of 8.75 in the current accounting period , assuming P/E ratio to be 40.
Prajâs technology breakthrough for producing âBio-bitumenâ
ďˇ Eco-friendly renewable material for road construction
Interesting reads
Biobitumen and its practical usage
Bio-bitumen for the roads of the future | Bio Based Press.
Considering 2g ethanol production by Praj,
1. How many plants are operational now ? Are they working to their fullest capacities?
2. How many more plants are waiting to be launched ?
3. How are the patent(s) going to benefit Praj ? (I mean things like lowering production cost or manufacturing superior qualityâŚafterall Ethanol is a commodity)
Thanks to whoever replies
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Praj owns the technology for making plants. It is not a Ethanol manufacturing company. It is a capital goods company in Industrial Biotechnology sector. And so the patents do work.
It doesnât matter as to whether the companies which makes ethanol run the plants in full capacity of not. Praj makes plants for them and they gets paid for that.
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Yes adding to that Praj also provides maintenance service and process improvement services for these plant. Also within bioethanol plant they do a lot of r&d to introduce new process improvement and product improvement. They are one of the best in the world in this space.
Meanwhile you need to study their other business which is still not quite appreciated by the market yet.
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Well then, please allow me reframe the query.
Why will companies ask Praj build plants for them ? Because they have the 2g technology ? If so , others with 2g technology are also in the queue and they can deliver good competitionâŚhow is praj going to handle that?
Here is an example TATA Projects wins order for bioethanol plant in India | Biofuels International Magazine
Thanks once again
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According to Praj they have two third market share in 1G ethanol projects.
They are building three 2 G projects in the country now.
In one of the interviews the CEO had mentioned that they were not able to penetrate Brazil market as their plants had higher initial capex, but operational efficiency was higher, which implies that their technology is superior.
That could make the difference between Praj and other playersâŚ
Disc- studying Praj, have a tracking position
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