Praj Industries

I thought apart from ethanol from sugar cane , they have also expertise for producing ethanol from Agri waste residues…
I find from their website that they are also in to waste water management and water purification systems … Not sure how active are they in water management systems which has also great future potential.

Disclaimer:
Have tracking position

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I second to you reason is most vehicals designed for 0 ethanol … Vehicle are not designed and as per NITI Ayog the trails are started since 2013-14 f0lor maximum 20% blending … . It has strong affinity for water so the blending can be limited . With increased blending the strengths of PVC and elastomers detoriates

The regulatory provisions ip to 20% is made but that too for only comercial use not for automotive purposes for automobiles it is max up to 85% in BS-IV

Next is the cost of vehicals will increase so presure would of various automobile companies to delay the release of version of vehicals will be.more because the performance of the vehicle will be not what they promise on advertisements and the cost of maintenance will increased.

It is cleaned resource yet to tap its full potencial govt has to check and reformulate the safety standards EVEN China has only targetef to 10% blending I am NOT saying CHINA is the stanadard comparision Yet even most developed nations Accpet Brazil has not yet incrased the blending …

Praj is now overbought and overvalued and future cash flow is now part of its current valuation and this euphoria will end soon but the the real dent will to the retail investers … IT iS GOOD for sugar companies they have increased VALUATUIONs and help tem.to pay their debts by selling the stock … yet i convince the PARTY will soon be over

Regards

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I don’t think it is overvalued. If we go by last quarter profit and company guidance EPS which is around 5 now should be atleast 12 in 2-3 quarters then PE will be around 30 then compared to 80 now. And company has much more offer apart from Ethanol.
Please feel free to correct if I am wrong.
Reference: https://youtu.be/-L7WGwYGTUc

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In Brazil, current mandate is 27% blending code named E27 which is already implemented since 2016.
The technology is already available to have cars to run on 100% alcohol and such cars are already running in Brazil.

https://documentcloud.adobe.com/link/track?uri=urn:aaid:scds:US:3d94268f-ac72-4a30-8305-84e3ebf52429

https://www.transportpolicy.net/standard/brazil-fuels-biofuels/

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Diverting Surplus Sugarcane for Ethanol makes huge sense but growing Sugarcane/Corn for Ethanol is nonsense.

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Hi @VALUE2017, @Shuchi_Nahar - tagging you since you seem to have followed this story quite well.

Can Praj be a steady compounder once it grows to the base of say 3000-4000 Cr of revenue? Or do we expect a revenue compression once the India ethanol story plays out? While there are segments like CBG, HiPurity etc. Praj is predominantly an ethanol play - anything else is an icing on the cake.

In case it is the former, then the stock offers reasonable value given a significant room for margin expansion. In case it is the latter, it becomes very hard to judge the business from an investment perspective.

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As already advised in my earlier post:

"In my opinion Ethanol story gets priced in Praj current valuation(+/-10%). For further increase in valuation Praj High Purity narrative has to convert into numbers.
With due respect to the management, it has always given narrative on Praj High purity but never discussed on numbers.
It will be interesting to watch narratives playing out into numbers in future for Praj High purity and other segments.

Disclosure: Invested from lower levels and booked partial profits at peak currrent valuation."

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Good insight on the road ahead.

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How to find out the order book of a company by quarter
ly basis?

Click the link above and you ll find it in the investor presentation for each quarter

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Ethanol technology is available with many vendors and I do not see any exclusivity with Praj Industries. Just found that small unknown company like Excel are also capable of supplying this technology. Apart from this ISGEC is also having execution capabilities for Ethanol.

ISGEC | Ethanol Plant | Ethanol Plant Supplier| Process House Equipment.
TERMOMECCANICA Zero Liquid Discharge (ZLD) Plants - TECHPERT

Since there is no exclusive and superior technology with Praj for Ethanol, it will be very difficult for negotiating high margin.

Also from some sources I have found out that in some cases Praj is now bidding for entire Project which apart from supply of Ethanol plant includes other construction related works. This will have positive impact on overall order inflow but then we will have to settle with lower margins.
Time stamp 34.40

Further with regard to 2G technology where the company has first mover advantage, the technology is yet to prove its commercial viability. Mr Joshipuria has smartly avoided answering directly to question related to IRR of 2g project in concal at time stamp PRAJIND Stock | Praj Industries Ltd Q1 FY22 Earnings Concall - YouTube. But admits at later part of the Concal that at least for next 2 to 3 years there will not be much of traction in 2G space.
In case 2G technology is commercial not viable then we will have to rely only on government projects in India. May be the Company will see traction overseas i.e Europe and USA.
CBG space will see traction after 18 to 24 months but viability is still a question???.

I some how feel lack of fire in the belly of management.

https://economictimes.indiatimes.com/plans2.cms?dc=ETPRFREDMP
Disclosure : Invested from lower levels and booked profit in 50% holding at higher levels around 360.

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Ethanol story is most probably priced in as far as India is concerned. Now CBG, Hi purity business, Zero liquid discharge business and renewable chemical business. These are possible future trigger for the company. Market size for CBG is known but remaining business which are potentially growth business with tail wind behind it but opportunity size is not known.

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Wanted to know if you have received the dividend

I totally agree with you price fluctuation is common in stocks, just wanted to know any reasons from business perspective that leads to this type of activity

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The order book intake has been poor for the past 2 quarters given the euphoria about the whole ethanol drive. The MD dodged my question on order book in the q1fy22 call. What I understand is that till environment clearance is not recevied by companies they don’t give an order to praj. We all know how much time EC approval takes in various states and therfore there is a lag in order bookings by praj.

Ideally for ethanol to be successful the govt could have had a single window clearance in various states but that is not so

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I recently saw on the EC website that some distilleries which have applied for EC’s in Feb have received the clearance in June - so roughly 3/4 months. Besides, some 8-10 new EC’s have been applied from various companies in this time period of which 2-3 projects, from my recollection, were big capacities 200 KLPD.
From what I have read and heard from ministry interviews, Niti Aayog report and EC website it seems to me that the govt. is dead focused on Ethanol story.

Discl: Not invested, actively following the story.

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