Praj Industries

Praj Beyond Ethanol

The next big thing for Parj as per this latest video from Equity master is CBG & SAF. CBG just begining …though yet to take off in a massive scale

Discl: Invested from lower level. Not a buy sell recommendation
please make your own assesment before investing

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MGL with BMC to Set up Asia’s largest CBG plant in Mumbai

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Praj founder and executive chairman Pramod Chaudhari, adjudged the Best CEO in Capital Goods sector, in latest edition of Fortune India ’s Best CEOs- A business update on Praj’s Past, present & future

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Praj Q2 Results Out.

PAT shows growth both QoQ and YoY
But revenue was not upto the mark. Does it meet the management guidance?
https://www.bseindia.com/xml-data/corpfiling/AttachLive/0ad9f1cc-a325-4442-b852-7cc3efc44bb5.pdf

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Revenues were flat as the CEO said- buying the feedstock from rice was disallowed for 6-8weeks.
Again this poses the risk of “government intervention”. Cannot track such developments and how will this risk be mitigated the company.

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Most companies today have these risks:

  • Government Intervention
  • Global export slowdown

Thanks for explaining reason of flat revenues. I will wait for another Qtr or some major event before increasing holding.
I only see two good companies in Ethanol/Biofuels play: Praj and Triveni Engineering.

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There is a lot of storification around CBG, SAF, Marine Biofuel, Bio Hydrogen etc. But are any of these areas going to play out for the business in the next one year or so?

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It depends completely on execution of government policies. All we can do is stay invested.

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Positive article in mint.

Discl.: Invested

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The game remains the same. the goal remains the same.

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Dropped by almost 100 Rs. in 2 days. Profit taking or any fundamental concerns?

image

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Fundamental concern is that due to sugar companies being banned from using sugar to produce ethanol, demand for ethanol plants orders will lower. Hence profit booking is seen.

Keep tracking and see if it consolidates. Company is still great for Ethanol & other Biofuels.

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Market is nervous in spite of the fact that the sugar industry is not very much perturbed. My take from the latest news flow and the ministry are as follows :

(1) Due to erratic rain this season, the Govt forecasts less production of sugar

(2) Election is not too far and increased sugar price due to less production could be an issue.

(3) India’s 50-65% Ethanol is produced from B heavy molasses which will continue. no stoppage here.
Moreover,there is no restriction on production of ethanol from C-heavy molasses, a sugar processing byproduct with very low sugar content, and that the government will encourage sugar mills to increase ethanol production from this feedstock- C molasses
.
(4) The ethanol direct from sugarcane juice / sugar syrup is stopped temporarily and it would be reviewed every month…

(5) in the meantime , the govt has clarified that there is no change in ethanol blending program.
The shortfall could be met by ethanol production from B/ C molasses , Maize and other 2G sources.

So Praj performance may not get impacted anyway as long as the OMC’s continue their off take of ethanol if made from b/ c molasses and 2G sources, Praj also makes 2G ethanol plants.

https://indianexpress.com/article/business/no-dilution-ethanol-petrol-blending-despite-sugar-feedstock-use-curbs-9059944/

Discl: Invested for long term. trying to add more at this correction.
This is not a buy and sell recommendation. please do your own assesment before investing.

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Further to the above post, The Govt has very well clarified their position.

As long as mandate for ethanol blending stands good- It does not matter from where ethanol comes- whether directly comes from sugar syrup or B/ C molasses, Rice husk or maize or Agri residues.

Let us appreciate the Govt’'s pre-emptive efforts in a bid to curb price of sugar , they are transparent in informing that they themselves are not sure about sugarcane production this year and they would review situation every month and that they are committed to ethanol blending.

Not only Sugar to ethanol restriction , they have banned onion exports and restriction on wheat stocking.

in any case rise in price of poor man’s food stuff like sugar , onion , wheat should not cause embarrassment to the Govt in an election year .

https://indianexpress.com/article/india/govt-further-cuts-wheat-stock-limits-bans-onion-exports-until-march-2024-9060418/

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Let’s assess if the market’s - “The world has come to an end” reaction makes any sense.

From what I understand so far, the only thing that has changed for now is the source of ethanol, Praj is not a sugarcane producer it makes machines, machines to extract ethanol irrespective of the source. In fact, this might boost sales as grain-based ethanol producers will require more machines to fulfill the demand and to continue meeting E20 targets.

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Let us look at Praj order book at Rs5000 crore which means next 18 months - their hands are full. what I have noted from the Q2 concall and a very recent analyst meet ppt on 29th Nov, 2023 by Praj is that they are on track with respect to their financial goals and the business strategy they have.

Praj Analyst Meet on 29 Nov, 2023- outcome

Order book and execution are quite far from each other. Execution can get delayed due to the clients postponing, especially if many orders were from companies planning to use Sugar to manufacture Ethanol.
Look at MTAR’s order book and guidance, it dropped significantly this quarter due to orders getting pushed to next FY due to US recession. I expect similar for Praj Industries.

Also, promoters had started selling actively before the official announcement. Smart people would have seen this announcement coming, due to election as well as lower sugar productiion.

Disclosure: Invested small quantity.

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Govt to procure a minimum of 100,000 tonnes of maize at the minimum support price (MSP) directly from farmers to ensure that Ethanol supply is not disrupted.

https://www.business-standard.com/economy/news/govt-may-buy-maize-directly-from-farmers-to-boost-ethanol-blend-programme-123120701183_1.html

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I think this news alone would propel Praj shares on coming Monday. Feeling good that I averaged up in this correction.

Sir, isn’t that news of Thursday? It came along with the Sugar based ethanol banning news.