Recommendation PRICE RANGE Target Price Time Horizon
Accumulate ₹ 340 – ₹350 Rs. 420 12 Months



Praj Industries is one of the most reputed & technologically advanced biotech & engineering companies in India. Co has more than 1000 customer present in 100+ countries across. They are into three business segment Bioenergy (77%), Engineering (15%), HI Purity (9%). Around 83% of the revenue come from India and 17% from Export. As on Q3FY22 Praj has an order book of 2605 Crore of which 66% is from Bioenergy segment.

Key Investment Rationale

•Praj has developed advanced bio methanation technology based on proprietary microbiological pre-treatment for production of compressed biogas, they commercialized a proprietary renewable gas technology – RenGasTM &has commissioned over 40 plants in India. The process creates value-added manure with organic soil as a byproduct while advanced biogas cleaning techniques gives pure methane. As world is moving to clean energy this technology will gather more pace.

• Marine Biofuel – Marine biofuels produced from certified lignin-based feedstocks are rapidly gaining interest among international ocean shippers and carriers.

• In 2021 India has achieved highest ever Ethanol blend of 8.1% with around 90% of Ethanol supplied from Sugary feedstock, the government has hiked the price of ethanol extracted from sugarcane for by up to Rs 1.47 per litre for 2021-22. Which will also utilize excess sugar in the country On International front company is seeing good momentum in capacity building in North and South America.

• Bio Syrup is witnessing good response on initial levels in Brazil. Praj’s commercial demo facility for production of Ethanol from BIOSYRUP has been successfully implemented in M/s Jaywant Sugars. BIOSYRUP was stored for the period of one year and no sugar loss was observed even after the period of 12 months. The technology has been validated and certified Vasantdada Sugar Institute (VSI) – India’s premier sugar research institution.

• Continued Strong Demand for Domestic Grain based 1G Ethanol plants: During Q2 FY22 ~118 Cr Liters of capacity was ordered built in the country of which ~94 cr liters was for Grain based capacity(starchy feedstock) indicating momentum in Grain based distilleries, this will ensure wide spread of Ethanol across country and help in achieving EBP targets. During the Q3 quarter company received orders worth 433 Cr from grain based distilleries.

• Praj Reported very strong Revenue growth of 68% YoY in Q3FY22, EBITDA was up 28% , EBITDA Margin was impacted by high material cost which came in at 8.71%.PAT was up 31.6% at ₹37.1 crore.

• Praj has a very strong order book of ₹ 2605 Cr, out of which 956 cr order came in Q3FY22, of the total order 78% is from domestic sector and 22% is from Export market. Execution is improving for the company


Praj is witnessing strong growth in its key segment Bio Energy in Domestic business, as government is pushing for ethanol blending from 10% to 20% in FY25, and Praj being a key player in Ethanol plant is going to be a beneficiary, the overall demand-supply gap of Ethanol, increased interest in grain based distilleries and decarbonisation impetus is auguring well for Praj along with development in other key verticals such as Biosyrups, High Purity gaining traction. Praj is a key beneficiary of multiple tailwinds from ethanol bleeding to bio energy. We expect a robust Revenue growth of 25% in Q4FY22 but margins are expected to fall due to high material cost, profit is expected to degrow 9% in this quarter, but seeing the long term growth visibility we recommend ACCUMULATE IN THE PRICE RANGE OF ₹340-355 on the company, valuing the company on 40x FY23 earning we recommend BUY for the target price of ₹420.

Profit And Loss Yearly Quarter Quarter Quarter Quarter
31-03-2022E 31-03-2022E 31-12-2021 30-09-2021 30-06-2021
Net Sales 2213 709 586 532 386
Other Income 29 13 5 7 5
Total Income 2243 722 591 539 391
Raw Materials 1374 445 359 334 237
Power & Fuel Cost 10 4 3 2 2
Employee Cost 213 54 59 56 44
Other Manufacturing Expenses 245 90 63 51 42
Selling and Administration Expenses 132 49 33 28 22
Miscellaneous Expenses 64 23 19 14 8
Total Expenditure 2040 663 535 486 356
EBIDTA 203 58 56 53 36
Interest 2 1 1 1 1
EBDT 200 58 55 52 35
Depreciation 21 5 5 5 5
EBT 179 53 50 47 30
Tax 39 11 11 12 5
Deferred Tax 7 1 3 1 3
Profit After Tax 133 41 37 33 22
EPS 7.62 2.57 2.02 1.82 1.21
Balance Sheet 2022E 2021 2020 2019
Net Block 210 207 219 215
Goodwill 64 63 63 64
Total Non-Current Assets 381 358 382 386
cash 67 101 46 64
Inventory 237 129 111 126
Receivables 589 453 330 305
Investments 290 295 124 166
Other current Assets 287 257 169 200
Total Assets 1851 1594 1162 1247
Share Capital 37 37 37 37
Reserve & Surplus 858 765 683 708
Total Equity 895 803 720 746
Total Non-current liabilities 28 27 32 16
Trade payable 469 342 187 235
Other Current liabilities 460 423 222 251
Total Current Liabilities 1851 1594 1162 1247
Cash Flow Statement 2022E 2021 2020 2019
Net Profit Before Tax 179 113 83 88
Depreciation 21 22 22 23
Working Capital Change (158) 116 (76) (37)
Tax Paid (39) (15) (18) (21)
Cash Flow From Operating Activity 3 236 15 54
Cash Flow From Investing Activity 2 (164) 62 (3)
Cash Flow From Financing Activity (40) (6) (98) (43)
Change in Cash (34) 66 (21) 7
Opening Cash 101 46 64 57
Closing Cash 67 101 46 64
I. Solvency Ratios 2022E 2021 2020 2019
Current ratio 1.58 1.62 1.91 1.77
Quick ratio 0.69 0.85 0.83 0.88
Cash ratio 0.11 0.17 0.12 0.18
Total Debt/Equity
Total Asset/Equity 2.07 1.99 1.61 1.67
Sales 2213 1304.67 1102.37 1141.11
COGS 1384.90 736.82 573.17 607.06
COGS % 63% 56% 52% 53%
II. Turnover Ratios 2022 2021 2020 2019
Receivables Turnover 4.81x 3.33x 3.47x 3.74x
Payables Turnover 4.17x 2.79x 2.72x 2.59x
Inventories Turnover 9.34x 6.14x 4.83x 4.80x
Average Receivables collection period 75.9 Days 109.6 Days 105.2 Days 97.7 Days
Average Payable Days (payment period) 87.6 Days 131.1 Days 134.4 Days 141.0 Days
Inventories Days 39.1 Days 59.5 Days 75.6 Days 76.0 Days
Cash Collection Cycle 27.4 Days 38.0 Days 46.4 Days 32.6 Days
III. Operating Efficiency 2022 2021 2020 2019
Total asset turnover (Sales / Average Assets) 1.29 0.95 0.92 1.83
Net fixed asset turnover 8.11 4.83 3.94 4.13
Equity turnover 2.61 1.71 1.50 1.53
IV. Return Ratio 2022 2021 2020 2019
ROA 7.75% 5.87% 5.50% 9.62%
ROE 15.73% 10.62% 9.03% 8.06%

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