Praj Industries - Expanding Bioeconomy Canvas To Drive A Sustainable Future: Systematix

Systematix Research Report

We attended the analyst meet of Praj Industries Ltd., represented by senior management and various business heads. The company is celebrating 40 years of its completion since inception and is committed to sustainability and innovation.

Management is optimistic on continued developments across its bio energy and engineering businesses. In the bioeconomy segment, the company is expanding its business horizons by leveraging its technology-led innovative solutions and aspires to become a global leader, looking to triple its revenue growth by 2030 from Rs 35 billion in FY23.

It expects to expand its non-bioenergy segment from 26% of revenue in FY23 to 38% by FY30. Management is looking to achieve a 50:50 revenue split from domestic and international markets (mainly from the U.S. and Europe) by FY30, from 80:20 split currently.

Higher contributions from the export market will also aid in margin expansion. The launch of Global Biofuel Alliance is also set to facilitate access to technology and foster an ecosystem that would support the production and consumption of biofuels.

While we remain optimistic about PRJ’s long-term growth opportunities, the recent 60% run up in the stock price over last six months already captures the near-term growth, in our view, leaving limited room for upside.

We have thus revised our rating on Praj Industries to 'Hold' from 'Buy', with an unchanged target price of Rs 620, based on 30 times FY25E price/earning (unchanged).

Key risks:

Change in Government of India’s ethanol blending policy, inability to passthrough raw material cost volatility, technological obsolescence, and supply-chain imbalance.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.