Praj Industries - Emerging Segments, Exports Key Focus Areas: Systematix

Systematix Research Report

Praj Industries Ltd.’s FY24 performance was a mixed bag; revenue fell a tad, while profitability improved on healthy gross margin expansion. In its FY24 annual report, the company shared its vision of building a bio-based future using sustainable and innovative solutions.

It expects to transform the business and shift focus to emerging segments like compressed biogas, energy transition and climate action and sustainable aviation fuel, to deliver profitable growth over the long term.

The company is also looking to deepen its international presence through unique and innovative decarbonization solutions. Praj is a dominant player in the domestic bioenergy sector, marked by sustained robust order book supported by healthy inquiries, and growing traction in starchy feedstock plants and CBG.

The sharp ~40% run up in its stock price since our report dated June 01, 2024, has led us to downgrade Praj to Hold from Buy. But we raise our target price to Rs 729 (Rs 607 earlier), based on 30 times FY26E price/earning (earlier 25 times).

Key risks: Change in government of India’s ethanol blending policy, inability to pass-through raw material cost volatility and technology obsolescence.

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