I know. But stock markets can be very irrational. Based on my observations, market tends to factor in any postive news in such a mayhem rather slowly. Same is not true other way round i.e. in a upward movement of a stock, if a negative news comes, market reacts immediately and tumbles fast. This weekend can prove to be beneficial in factoring in all such +ve news and thus next week, share price should recover. But as I said earlier, market can be very irrational at times, so let s see what happens.
4 Likes
Insiders are selling
| ame to Person | Category of Person * | Securities held pre Transaction | Securities Acquired / Disposed | Securities held post Transaction | Period ## | Mode of Acquisition # | Trading in Derivatives | Reported to Exchange |
|---|---|---|---|---|---|---|---|---|
| Type of Securities ** | Number | Value | Transaction Type | Type of Contract | Buy Value | |||
| (Units~) | Sale Value | |||||||
| (Units~) | ||||||||
| Atul Mulay | Designated Person | 89300 (0.05) | Equity Shares | 23000 | 14896500.00 | Disposal | 66300 (0.04) | 30/11/2023 |
| 30/11/2023 | Market Sale | null(null) | null(null) | 07/12/2023 | ||||
| Atul Mulay | Designated Person | 66300 (0.04) | Equity Shares | 2000 | 1285800.00 | Disposal | 64300 (0.04) | 05/12/2023 |
| 05/12/2023 | Market Sale | null(null) | null(null) | 07/12/2023 | ||||
| Shishir Joshipura | Director | 72291 (0.04) | Equity Shares | 22291 | 13266004.00 | Disposal | 50000 (0.03) | 23/11/2023 |
| 24/11/2023 | Market Sale | null(null) | null(null) | 28/11/2023 | ||||
| Shishir Joshipura | Director | 100000 (0.05) | Equity Shares | 27709 | 16224934.00 | Disposal | 72291 (0.04) | 21/11/2023 |
| 22/11/2023 | Market Sale | null(null) | null(null) | 23/11/2023 | ||||
| Mallikarjun Navalgund | Designated Person | 62000 (0.03) | Equity Shares | 7000 | 4076757.00 | Disposal | 55000 (0.03) | 28/09/2023 |
| 29/09/2023 | Market Sale | null(null) | null(null) | 23/10/2023 | ||||
| Sachin Vinayak Raole | Director | 145000 (0.08) | Equity Shares | 70000 | 41020576.00 | Disposal | 75000 (0.04) | 25/09/2023 |
| 25/09/2023 | Market Sale | null(null) | null(null) | 26/09/2023 | ||||
| Yashodhan Mankame | Designated Person | 68000 (0.04) | Equity Shares | 29988 | 14776832.00 | Disposal | 38012 (0.02) | 18/08/2023 |
| 21/08/2023 | Market Sale | null(null) | null(null) | 25/08/2023 | ||||
| SIVARAMAKRISHNAN IYER | Director | 60000 (0.03) | Equity Shares | 40000 | 19249000.00 | Disposal | 20000 (0.01) | 18/08/2023 |
| 21/08/2023 | Market Sale | null(null) | null(null) | 21/08/2023 | ||||
| MR. BERJIS DESAI | Director | 42589 (0.02) | Equity Shares | 42589 | 16420259.00 | Disposal | 0 (0.00) | 07/06/2023 |
| 09/06/2023 | Market Sale | null(null) | null(null) | 12/06/2023 | ||||
| BERJIS DESAI | Director | 82337 (0.04) | Equity Shares | 39748 | 15500406.00 | Disposal | 42589 (0.02) | 03/06/2023 |
| 06/06/2023 | Market Sale | null(null) | null(null) | 07/06/2023 | ||||
| MR. BERJIS DESAI | Director | 99670 (0.05) | Equity Shares | 17333 | 6846535.00 | Disposal | 82337 (0.04) | 31/05/2023 |
| 02/06/2023 | Market Sale | null(null) | null(null) | 05/06/2023 | ||||
| Berjis Desai | Director | 147443 (0.70) | Equity Shares | 47773 | 16295743.00 | Disposal | 99670 (0.50) | 31/03/2023 |
| 31/03/2023 | Market Sale | null(null) | null(null) | 03/04/2023 | ||||
| BERJIS DESAI | Director | 197443 (0.10) | Equity Shares | 50000 | 16450000.00 | Disposal | 147443 (0.70) | 29/03/2023 |
| 29/03/2023 | Market Sale | null(null) | null(null) | 31/03/2023 | ||||
| BERJIS DESAI | Director | 200000 (0.11) | Equity Shares | 2557 | 958875.00 | Disposal | 197443 (0.10) | 13/02/2023 |
| 13/02/2023 | Market Sale | null(null) | null(null) | 31/03/2023 | ||||
| Mr. Berjis Desai | Director | 328410 (0.16) | Equity Shares | 128410 | 53301472.00 | Disposal | 200000 (0.11) | 25/10/2022 |
| 27/10/2022 | Market Sale | null(null) | null(null) | 31/10/2022 | ||||
| Mr. Yashodhan Mankame | Designated Person | 73000 (0.04) | Equity Shares | 5000 | 2160000.00 | Disposal | 68000 (0.04) | 01/09/2022 |
| 01/09/2022 | Market Sale | null(null) | null(null) | 08/09/2022 | ||||
| ATUL MULAY | Designated Person | 57300 (0.03) | Equity Shares | 6000 | 2512891.00 | Disposal | 51300 (0.03) | 30/08/2022 |
| 01/09/2022 | Market Sale | null(null) | null(null) | 06/09/2022 | ||||
| MR. BERJIS DESAI | Director | 400027 (0.22) | Equity Shares | 71617 | 23991695.00 | Disposal | 328410 (0.16) | 31/12/2021 |
| 31/12/2021 | Market Sale | 03/01/2022 | ||||||
| BERJIS DESAI | Director | 500027 (0.27) | Equity Shares | 100000 | 35511000.00 | Disposal | 400027 (0.22) | 10/12/2021 |
| 10/12/2021 | Market Sale | 14/12/2021 | ||||||
| Mr. Mallikarjun Navalgund | Designated Person | 102000 (0.05) | Equity Shares | 40000 | 13757493.00 | Disposal | 62000 (0.03) | 17/09/2021 |
| 30/09/2021 | Market Sale | 06/10/2021 | ||||||
| Mr. Karthik Ranganathan | Designated Person | 1500 (0.00) | Equity Shares | 1500 | 513217.00 | Disposal | 0 (0.00) | 20/09/2021 |
| 24/09/2021 | Market Sale | 29/09/2021 | ||||||
| Mr. Karthik Ranganathan | Designated Person | 37800 (0.02) | Equity Shares | 36300 | 12454687.00 | Disposal | 1500 (0.00) | 20/09/2021 |
| 24/09/2021 | Market Sale | 29/09/2021 | ||||||
| Mr. Atul Mulay | Designated Person | 61500 (0.03) | Equity Shares | 4200 | 1563404.00 | Disposal | 57300 (0.03) | 30/06/2021 |
| 30/06/2021 | Market Sale | 08/07/2021 | ||||||
| Dr. Pramod Kumbhar | Designated Person | 107398 (0.06) | Equity Shares | 5000 | 2025000.00 | Disposal | 102398 (0.06) | 07/06/2021 |
| 08/06/2021 | Market Sale | 16/06/2021 | ||||||
| Dr. Pramod Kumbhar | Designated Person | 112398 (0.06) | Equity Shares | 5000 | 1953792.00 | Disposal | 107398 (0.06) | 07/06/2021 |
| 07/06/2021 | Market Sale | 16/06/2021 |
Correct, I think now would be the time to wait and watch. I am convinced on the long term story of the company, and management just keeps winning awards left and right.
If it comes back to 350 levels, it would be great for people like me to increase their position.
Promoters and employees do have their own demat trading account and nowadays it is common to see in most companies Promoters / Insiders selling/ buying with Bad or good news flow which perhaps they may come to know in advance. As long as they comply to SEBI guidelines for buying or selling , it may be ok.
And if there is good news flow , they may buy again and we also many times buy/ sell on news flow. Yes, they are at an advantage being insiders. If it is a insider trading or corporate governance issues by definition , then there are agencies like SEBI who does investigation and take them to task.
As an investor , we should look at fundamentals and apply due diligence before buying.or selling.
we should not get perturbed by what market does or how the market react all of a sudden.
In my view , fundamentals of this biotechnology stock is in tact unless there is corporate Governance issues and there is a adverse decision or policy change. From the news flow and statement from Govt , to my understanding ethanol production in no way is getting affected. The same ethanol plant can make ethanol from Sugarcane juice, B Molasses , C molasses , damaged and surplus maize, rice.
If sugar cane juice is restricted , three are many other windows open.to make ethanol for which Govt is taking action, e.g procurement of maize st MSP from farmers . Also , Govt is open to review and revoke decision if the sugarcane production does not decline.
discl: Invested at lower level and for long term. This not a buy sell recommendation. please do your own assessment before taking any such buy/ sell recommendation.
2 Likes
A big investor in Indian ethanol producers is not worried about the new curbs. Has strong conviction in Praj
CNBC interview with Ravi Dharamshi well known as Rakesh Jhunjhunwalaâs protege.
You can read the article interview and watch in CNBC Video too at top.
2 Likes
I agree with the views in the interview for Praj in particular. I think the direction of the govt is clear on bio-fuel. They want to move the industry towards 2g types of ethanol production. Considering Praj is not the producer of ethanol, it makes machineries and infrastructure for the production of ethanol, they will simply need to switch the ramping up of their 2g division in medium to long term (they already have this division in place). Having said that, this longer term move of govt may not be so good news for sugar companies. The moment the market realises this distinction between the sugar companies and companies like Praj, Gulshan poly etc., stock price will shoot up.
2 Likes
More than Praj investors , the Sugar industry is very much worried and so also the investors in Sugar companies and tomorrow the sugar industry association meeting with PMO.
The sugar companies have put a lot of money in making Ethanol from sugarcane as it is profitable to make ethanol than sugar from sugarcane.
Govt maintains consistently since last 3 days that it is only a temporary pause for ethanol from sugarcane , but all other windows remain open for making Ethanol 1G from Grains, Maize , molasses and 2G ethanol from agri residues to ensure that ethanol blending program is not getting hampered in anyway. Govt is also ready to supply maize for 1G ethanol to ensure that Ethanol blending program is not derailed
So , i donât see any impact on Praj
2 Likes
1 Like
Modi naturals receives Rs 240 Crore Ethanol order (Grain based) from BPCL, IOCL, HPCL
There are 100âs of Grain based 1G- ethanol plants of different sizez & Capacities are at various stages of operation and as of today, Grain based ethanol comprises of 1/5 th of total ethanol requirement.
Recently, a lot of established players are jumping in to Grain based ethanol (1G). Modi naturals is the latest one-an edible oil company well known (there is a valuepickr thread) has diversified in to Grain based ethanol production which was commissioned in Sept 2023 with a capacity of 250 KLPD. They got their first order of 3.72 Crore litres of ethanol for Rs 240crore.
Bihar is a maize surplus state. There are some 15 megs plants coming up, two of them are already in operation.
There is yet another company Fertiliser cooperative Krishak Bharati Cooperative Ltd (KRIBHCO) is investing around INR 1,100 crore to set up three ethanol manufacturing plants using maize and broken rice as feedstock. These three plants are being set up in Gujarat, Telangana and Andhra Pradesh with a capacity of 250 kilo litre per day.
All this will ease the issue of Sugar ethanol in coming days.
2G ethanol plants are also coming up in big ways. All this will ensure flexibility in getting ethanol for the ambitious petrol blending program and save forex and ensure carbon foot print and sustainability.
For Praj , there would not be any dearth of future orders inflow
2 Likes
Govt issues revised order to allow use of Sugarcane juice for ethanol petrol blending program.
However no diversion of sugarcane juice is permitted for making Rectified spirit and extra neutral alcohol
4 Likes
Grain based Ethanol - One more large single order worth Rs 1164 Crore from Oil PSU on Grain based alcohol.
So whether it is sugar based on grain based ethanol, how does it matter for Praj?
Itâs 1G ethanol plants are suitable for both.
The International Race for Biofuel Dominance Is Heating Up
Govt planning export duty on export of molasses- currently there is no such export duty
. A win for fuel blending as govt weighs molasses export levy | Mint
Govt raises price of ethanol from C- molasses to Rs56 / litre from existing Rs 49 per litre.
Last month the price was revised from Rs 46 to Rs 49 and now it is further revised to Rs 56 per litre.
This is as per the news flashed in ET Now news just now and news item from CNBC TV
This will encourage sugar mills to produce ethanol from C- molasses
1 Like
4 Likes
The entire ethanol space is subdued at present and praj is mainly linked to the same. So when the Ethanol story related stocks start moving, this will follow. Action in Ethanol space will begin post elections due ro sensitivity of the whole spectrum - sugar, rice, millets, husk, grain price + farmers who are biggest vote bank.
I may be wrong completely but thats what its playing out right now. Government flip-flops also indicate the same as they are treading extremely cautious lines and changing goal post at slightest of hint of things going in undesirable direction.
3 Likes
Posted decent results with growing order book.
Disc. Holding
2 Likes
400 retail outlets of IOCL to Sell 100% Ethanol code named E100 by April15
What exactly is E100? What is its retail price ?
Who are the Automakers those have made vehicles to run on 100% Ethanol?
Please read on these links below!
Praj , Industry: Engineering
About company
Praj Industries Ltd, incorporated in 1983, is one of the technologically advanced process and project engineering companies in the world.
Company operates in 3 business verticals-:
- Bioenergy
a. 1G Bio Ethanol Plant â market leader in domestic 1G ethanol segment
b. 2G Bio Ethanol Plant - key players in the 2G ethanol segment
c. Compressed BioGas Tech
d. Future BioFuels - High Purity solutions
- Engineering Business
a. Critical Process equipmentâs
b. Breweries
c. Industrial waste and waste water treatment
-
With a team of 90+ technologists and 300+ patent filings, the companyâs four world-class, well-equipped manufacturing facilities are located in Maharashtra and Gujarat.
-
Global offices are located in Thailand and the Philippines in Southeast Asia and in Houston, Texas, USA.
-
Continuous Innovation
Developing differentiated technologies in partnership with international players:-
Biosyrup:
Company has developed a patented technology to process cane juice into conditioned BIOSYRUP that has a storability of up to 12 months without contamination. This enables sugar mills to produce ethanol beyond the sugar season, thereby helping increase production capacity and maximise revenue. The unique technology solution is also attracting attention globally, especially from Brazil. -
PROFIIT (Process Optimized Flexible Integrated Incineration Technology):
In partnership with Thermax Ltd., the company has developed a new technology called PROFIIT to tackle the problem of waste generated during the process. This technology reduces the high consumption of supporting fuel and OPEX. -
Bioprism:
This technology focuses on bioplastics (renewable chemicals and materials- RCM), a sustainable solution to replace single-use plastics. These products have applications in industries, such as automotive, packaging, furnishing, construction, agriculture and food. Renewable chemicals have the potential to replace most chemicals that are currently sourced using fossil resources -
RenGas (Renewable Natural Gas) Technology:
Company has developed the worldâs first of its kind RenGas technology using proprietary microbes to produce compressed Bio-gas from Agri-residues/organic wastes. Company claims that the RenGas technology operates with 30% lower operating costs against traditional fossil fuels methods. -
EcoCool:
Evaporative cooling towers are conventionally used in distilleries, which results in a loss of water. To overcome this, the company has introduced EcoCool technology, which drastically reduces water consumption by up to 75% as well as the cost of pre- and post-treatment of water
-
Investment Rationale
-
leadership in domestic ethanol (~50-55% market share)
-
largest domestic CBG pipeline
-
healthy export outlook in Engineering driven by Energy Transition &Climate Action (ETCA) segment. Order book with healthy increase in export. Domestic/Export mix in the order book is 75/25% (vs 79/21% in Q3FY23).
-
Praj GenX Limited : Investment in Engineering &Critical Process Equipmentâs& Skids (CPES) business: Praj launched a new subsidiary with a capex of 100 Cr to offer cutting-edge modularized solutions as well as critical equipment for various low carbon fuel projects such as Blue and Green Hydrogen/ ammonia etc .
- Successfully completed the statutory requirements for the start of operations in the Manglore facility.
- In February 2024, initial commercial production to be carried out.
-
Focus on future-ready technologies like 2G ethanol plants, RenGas (for compressed bio gas- CBG), and Sustainable Aviation Fuel (SAF) to sustain leadership.
-
Strengthening distribution network for services business offering in Brazil and USA. Increasing penetration in newer geographies for products as well as services business.
-
Technology prowess with strong inhouse R & D capability, collaboration with global and domestic leaders to offer industry-best solutions
Developing differentiated technologies in partnership with international players, companyâs partnership with international players and technology prowess in the bio-energy space bodes well to seize upcoming opportunities in the bioenergy sector -
Mandatory CBG blending with CNG & Focus on Bio-Plastics:
- CBG Blending Obligation (CBO) announced that mandates blending of CBG in CNG & PNG from FY 25-26.
- By the end of FY29, CBO mandates are expected to increase from 1% to 5% for blending.
- This will encourage an investment of almost 37,000 cr, in order to facilitate the establishment of 750 CBG projects by the end of the FY 28-29.
Praj received Four contracts which were part of five project LOI with one of the conglomerates. In this segment, the company is now experiencing positive developments with regard to an overall enquiry pipeline
-
Ethanol blending pace:
-
EBP 20 Programme: The âNational Policy on Biofuelsâ notified by the Government in 2018 envisaged an indicative target of 20% ethanol blending in petrol by 2030. However, considering the encouraging performance, due to various interventions made by the Government since 2014, the target of 20% ethanol blending was advanced from 2030 to 2025â26.
-
Demand Estimation: As per the NITI Aayog findings, based on the projected sale of petrol, the estimated requirement of ethanol for blending with petrol is 698 Cr litres for ESY 2023â24, 988 Cr litres for ESY 2024â25, and 1016 Cr litres for ESY 2025â26, and the total requirement of ethanol, including other sectors, is estimated to be 1350 Cr litres in 2025â2026.
-
-
State governmentâs intervention to increase capacity:
(A) Tamil Nadu government unveiled its 'TN Ethanol Blending Policy 2023â, to attract investments worth Rs 5000 Cr in molasses/grain-based Ethanol production capacity.
(B) Jharkhand government has issued the Ethanol Production Promotion Policy-2022 with a provision of 25% subsidy, or a maximum of Rs 30 Cr, for setting up ethanol plants in the state -
Subsidy from the government:
The Ministry of Petroleum & Natural Gas has approved financial support of Rs 20 bn for 12 integrated bioethanol projects (HPCL, 4 plants; IOCL & BPCL, 3 plants each; and MRPL and Numaligarh Refinery, 1 Plant each) planned to be set up with an investment of Rs 140 bn under the Pradhan Mantri JI-VAN Yojana scheme. -
1G Ethanol robust opportunity:
India currently has a total ethanol production capacity of 8.5bn litres, which includes 5.7bn litres based on sugary feedstock and 2.8bn litres based on starchy feedstock, such as rice, wheat, barley, and corn (Source: Companyâs annual report over 2021-22).
Currently, ethanol blending in petrol in India has reached ~10% mark. India needs an installed capacity of 19bn litres to achieve the targeted E20 program.
-
Financials
Improved margins owing to growing share of services & exports- Strong growth: company reported a strong CAGR of 47% in revenue, 57% in EBITDA and 50% in PAT over FY19-FY23, on the back of huge demand from sugar mills to set up ethanol plants to meet governmentâs E20 blending target.
- Debt free and Cash surplus: Company is debt free and had cash and liquid investments worth of Rs 687 Cr at the end of FY 23, which is almost 10% of market capitalization.
- Free Cash Flow to improve: FY 23 free cash flow (FCF) is at Rs 126.93 Cr as against Rs 169.14 Cr in FY 22. With a strong earnings profile, stable working capital, and minimum CAPEX for the upcoming quarters, we expect Free Cash flow to improve in the coming quarters.
-
Growth:
-
focus on newer technologies like 2G ethanol, bio-manufacturing, SAF, multi feedstock plants, etc
The company is aiming for 3x revenue growth by 2030 driven by significant opportunities in exports (energy transition & climate action across the globe, low-carbon ethanol for SAF in US, etc.), ~Rs370bn investment pipeline in CBG, and alternative feedstock in 1G & 2G ethanol. -
Scaling up of its non-bio-energy businesses, Praj HiPurity Systems (HPS), Critical Process Equipment & Skids (CEPS), and waste water treatment.
The Budget also announced a scheme forbio manufacturing sector, providing environmental friendly alternatives such as biodegradable polymers, bioplastics. -
Bio-Plastic pilot plant:
Installation of Pilot plant for Bio-Plastics and Bio-Polymers is nearing to completion and company expects demo plant operation to start by April 2024 that is Q1FY25. -
SAF:
In the USA, under the IRA programme the inflation reduction act set a target of 3 bn gallons per year of SAF capacity by 2030, of which 1.4 bn gallons are likely to be on the alcohol to jet route and where ethanol will play an important role in the future. It is necessary to achieve low carbon ethanol status for the ethanol that is required for this SAF production.
Thereâs a lot of ethanol plants in the U.S., but now they have to convert to low carbon ethanol, and thatâs where Prajâs looking for an opportunity -
Higher execution in ETCA segment (Engineering) post commissioning of Mangalore facility along with strong development in zero Liquid discharge and CHS verticals. Usage of Hi-Purity water in battery chemicals and semiconductor chips to drive PHS growth.
-
Global Potential:
The potential for low carbon ethanol continues to be viable; however clarity on section 45Z of inflation reduction act in US is still awaited. This leads to delays in the allocation of capital expenditure for such projects. These clarifications are expected to be made before June 2024, which would enable praj to convert an energy contract into a supply agreement in order to provide equipment for the financial year 2025.
-
Govt Restriction on use of Sugar Syrup & Limited use of B-Heavy posed a near-term drag: Due to policy changes, the company witnessed a arid quarter with zero orders from sugar based ethanol plants. Praj has already developed solutions for mitigating the feed stock challenges for sugar stock customers with multiple feed stock solutions.
To promote the ethanol production from C Heavy Molasses OMCs offering incentive of 6.87 litres per litre. The government has increased the price by Rs. 5.89 to Rs. 71.86 per litre in order to support ethanol production from maize, so as to encourage alternative sources of feedstock.
Q3FY24 Concall Highlights
-
Policy restriction on use of sugar syrup as feedstock created a near-term challenge in the market. Government revised the order to allow use of both sugar syrup and B-heavy molasses, but with a cap of diversion of up to 1.7mn MT of sugar for ethanol production.
-
Government announced incentive of Rs6.87 per liter for encouraging ethanol production from C-Heavy molasses, and an upward revision in price by Rs5.79 per liter to Rs71.86 per liter for ethanol produced from maize.
-
1G Domestic:
- Unusual quarter with no order finalization for sugar-based ethanol plants, though this should be a temporary situation.
- Offering solutions to convert single feedstock plants to multi feed stock plants.
- Demand for ethanol is not going away; need to create flexibility at the input side.
- Syrup based order book is ~Rs2.5bn â this execution is delayed.
- B-Heavy order book is ~Rs4.5bn, but this also has option to use C-Heavy feedstock.
- Witnessed steady flow of starchy feedstock-based inquiries getting converted into orders.
-
2G Ethanol:
- IOCL Panipat plant recommissioning in progress.
- Delay has occurred on original target due to challenges in feedstock supply chain (quality and physical availability).
- An agreed two-stage program with IOCL will establish the performance of plant in Q1FY25.
-
Engineering Services:
- Energy transition is a very important growth agenda globally for the business.
- ~2/3rd third of the order book is from ETCA.
- GenX Mangalore facility expected to start commercial production by mid-Feb.
- This is facilitating diversification of order book with ETCA.
- Zero liquid discharge (ZLD) is also seeing healthy inquiry inflow.
- Establishing strong distribution network to offer solutions in enzymes, yeast and performance enhancers.
-
Sustainable Aviation Fuel (SAF):
- IRF set goal in US of 3bn gallons of SAF capacity by 2030 â 1.6bn via HEFA route and balance via alcohol to jet route, which requires low-carbon ethanol.
- Accordingly, there is large opportunity to convert ethanol plants in US to low-carbon.
- Every 2L of ethanol will give 1L of SAF.
- Currently working on 6 engineering projects in US.
- Clarification on Section 45Z of Irish Republican Army(IRA) is expected before Jun-24.
- This can help in converting the engineering contracts into supply of equipment in H2FY25.
-
Compressed Biogas (CBG):
- CBG Blending Obligation mandates blending of CBG in CNG & PNG from FY26.
- Blending to reach 5% by FY29, creating Rs370bn opportunity to establish 750 CBG projects by 2029.
- Capacity creation will take time, but may see healthy inquiry volumes develop towards end of FY25.
Key question is on accessibility to feedstock; government announced financial assistance for feedstock collection.
-
Bio manufacturing: Installation of PLA demo plant is nearing completion; expect operations to start by April-24.
-
International business saw minor shifts in order booking cycle, but inquiries are very healthy with energy transition as a clear phenomenon. GenX plant has taken an additional quarter to get commissioned; hence there are delays in orders from international engineering customers.
Segment Growth
Biofuel
Biofuels Market Size, Share & Growth Analysis Report, By Fuel Type (Biodiesel and Ethanol), By Feedstock (Coarse Grain, Sugar Crop, Vegetable Oil, Jatropha, Molasses) - Global Industry Analysis, Trends, Revenue, Segment Forecasts, Regional Outlook 2024 - 2033
BioEnergy
The global bioenergy market size was estimated at US$ 125 billion in 2022 and is expected to surpass around US$ 256.42 billion by 2032, growing at a CAGR of 7.50% during the forecast period 2023 to 2032.
Brewery
Expanding at a CAGR of 4.5-5.9 %, the market will exhibit steady growth during the forecast period (2024-2032).
Waste Water Treatement
The global water and wastewater treatment market size was estimated at USD 328.74 billion in 2023 and is expected to hit around USD 576.43 billion by 2032, growing at a CAGR of 6.4% during the forecast period from 2024 to 2032.
Segmental Revenue
Order Book
⢠Q3FY24 â INR 39,500 Mn , Order Intake: INR 10,370 mn
⢠Q2FY24 â INR 39,600 Mn , Order Intake: INR 10,630 mn
⢠Q1FY24 â INR 37,785 Mn , Order Intake: INR 11,010 mn
⢠Q4FY23 â INR 34,140 Mn , Order Intake: INR 10,380 mn
Q3FY24 Revenue:
Bioenery:5860 INR Mn
Engineering: 1,730 INR Mn
HiPurity: 700 INR Mn
Q2FY24 Revenue:
Bioenery:6980 INR Mn
Engineering: 1280 INR Mn
HiPurity: 560 INR Mn
Q1FY24 Revenue:
Bioenery:5877 INR Mn
Engineering: 998 INR Mn
HiPurity: 491 INR Mn
** Q4FY23 Revenue:**
Bioenery:7170 INR Mn
Engineering: 2062 INR Mn
HiPurity: 808 INR Mn
Business Model:
- BioEnergy
The segment is further divided into four sub segments:
-
1G Bio-ethanol Plant, which offers an end-to-end solution for the ethanol production from sugar-based feedstocks like sugarcane juice, sugarcane molasses, beet, and starch-based feedstocks like corn, rice, and wheat, collectively referred to as 1st(1G) generation feedstocks.
-
2G Bio-ethanol Plant: second-generation ethanol plant differs from the first generation in terms of feedstocks used and processing technology.
In this vertical, the company offers solutions to set up bio-refineries based on its proprietary Enfinity 2G lignocellulosic ethanol technology, which uses agri-residues like rice and wheat straw, cane trash, corn cobs and stover, cotton stalk, bagasse, etc. as feedstock. -
Compressed Biogas (CBG) Technology: In the CBG segment, it has set up manufacturing plants for clients to produce CBG by deploying its proprietary technology, RenGas.
-
Future biofuels: Over the years, the company has forged strong partnerships with global as well as domestic players and developed technologies for next generation biofuels, which include SAF, bio-marine fuel, bio-methanol, and biohydrogen.
- HiPurity System
Prajâs Hi-Purity Systems Ltd., a wholly owned subsidiary with a market share of 35â 40%, offers ultra-high purity water systems, modular process systems (MPS), and fermentation solutions to customers engaged in biopharmaceuticals, sterile formulations, complex injectables, cosmetics, and the wellness industries
- Engineering Business
-
Critical Process Equipment & Skids (CPES): Under this business division, the company offers conceptualization, engineering design, and manufacturing of critical equipment such as reactors, high pressure vessels, heat exchangers, and customer specific proprietary equipment to global customers across the hydrocarbon, pharmaceutical, gas, and chemical industries.
-
Waste water treatment plants: The industrial waste water treatment division of Praj offers a comprehensive range of basic to most advanced solutions for industrial effluent treatment, recycling, and zero liquid discharge (ZLD) systems for customers across several sectors, namely steel, power, chemicals, fertilisers, food & beverage, textile, tannery, dairy, pharmaceuticals, etc.
-
Brewery & Beverages: With over 70% market share in the Indian brewery industry, the company offers a complete range of solutions in conceptualization, technology, design, plant engineering, project installation, and commissioning to customers in the brewing industry using its proprietary EcoSmart technology.
Drop in share price
Restriction on use of sugar syrup in ethanol production delayed execution (syrup-based contracts account for Rs2.5bn in the order book); however, this is likely a temporary phenomenon.
Govermant news:
In a letter to Indian sugar mills and distilleries, the Department of Food and Public Distribution (DFPD), which is the nodal agency for sugar policies in India, invoked provisions of the Essential Commodities Act, 1955 (ECA) to direct two changes: (i) ban use of sugarcane juice and syrup for ethanol production; and (ii) restrict ethanol produced from B-heavy molasses to already contracted quantities and with the cap of diversion of upto 1.7 Mn MT of sugar for ethanol production⌠These apply to ethanol supply year (ESY) 2023-24 (i.e., November 2023 to October 2024).
Among other things, two things can be deduced from this:
- apart from grains, ethanol is mainly to come from the C-heavy molasses route in ESY 2023-24,
- with smaller cane-based feedstock, ethanol blending performance this year is likely to fall below the levels of E12 in ESY 2022-23.
Impact:
Process of generating Ethanol from Sugarcane
Govt Order:
Impacted
The 34% is impacted
Key Risks
- Delay in order execution, or cancellation of orders.
- Delay in execution of Government policies and International policies and regulations ***
- Raw material inflation and technological advancement by competitors may disrupt the business.
Leadership
Shishir is a Mechanical Engineer from the prestigious Birla Institute of Technology & Science (BITS) Pilani and an Advanced Management Graduate from Harvard Business School. He has over 35 years of rich experience in varied fields of engineering.
Shishir possesses a strong business and leadership record. He began his career with Thermax Ltd and held several key positions to rise through the ranks to become Executive Vice President and Global Head of Cooling & Heating business. He was also the Director of overseas subsidiaries of Thermax in USA, Europe, South America and successfully set up a manufacturing subsidiary in China.
Before joining Praj, he served as Managing Director of SKF India Ltd from 2009 to 2018.
My outlook for Praj
-
The ban in using sugar syrup for ethanol production could be temporary or permanent:
- Election season
ď§ Ethanol Businessman (Minority)
ď§ Sugar consumer (Majority) - National Federation of cooperative Sugar Factories (NCSF)
ď§ Due to encouragement from central government to achieve 20% ethanol blending, Investments worth 50,000 crore for plants.
ď§ Industries have taken 95% loan for capex.
ď§ If this becomes permanent could disrupt the industry and unimaginable losses - If government doesnât remove these restrictions, will lead to trust loss on government.
ď§ No participation/support for new initiatives launched by government.
ď§ May effect next elections - Biggest Benefactor of Ethanol is Government, as its saving money in import of crude oil, blend ethanol at lower prices.
- Ban could be long term or in an On-Off mode: More sugar means reduction in margin of sugar and ethanol will become more viable for the B-heavy molasses and companies may start producing more ethanol using B-heavy molasses.
- Election season
-
Company is leader in domestic ethanol, CBG pipeline and expanding in 2G ethanol, bio-manufacturing, SAF, multi feedstock plants, etc.
-
Company is expanding in export especially in engineering driven by ETCA
-
Company capturing 70% of brewery equipmentâs market in India
-
Healthy order book and good increase in operating profit and increase in net profit. Zero borrowing
-
Government policies - Mandatory CBG blending with CNG , budget also announced a scheme for bio manufacturing sector, providing environmental friendly alternatives such as biodegradable polymers, bioplastics.
-
SAF related demand is expected to see traction from Juneâ24 as USA gets clarity on 45Z Interest Reduction Act.
-
Praj GenX, a new subsidiary of Praj Industries will be catering to the Engineering and Manufacturing of Large Size Process Modules & Heavy Equipments. The company will be serving the growing business in the Energy Transition & Climate Action sector.
⢠In February 2024, initial commercial production to be carried out. -
To promote the ethanol production from C Heavy Molasses OMCs offering incentive of 6.87 litres per litre. The government has increased the price by Rs. 5.89 to Rs. 71.86 per litre in order to support ethanol production from maize, so as to encourage alternative sources of feedstock.
-
P/E ratio of 30.8 is good and current price of 468 is stock at discount. Stock is reduced from its alltime high in dec from 650 to current rate of 450s due to government restriction announcement in december
Disclaimer: Not holding stock yet
18 Likes