Praj Industries Q1 Results Review - Healthy Margin Expansion; Order Execution To Pick Up Pace: Systematix

Systematix Report

Praj Industries Ltd. Q1 FY25 revenue dropped 5% YoY and 31% QoQ to Rs 7 billion, missing estimates by 10%. Bio energy revenue slipped 14% YoY, Engineering grew at robust 42% YoY and Hi-Purity segment reported 8% YoY growth.

Domestic revenue fell 12% YoY to Rs 5.4 billion, as order execution and finalization slowed due to unresolved restrictions on usage of select sugary feedstock and ban on Food Corporation of India rice for ethanol production and impact of national election.

Export revenue surged 28% YoY to Rs 1.6 billion. Gross margin expanded sharply by 1,240 basis points YoY and 912 bps QoQ to 52.7% (above our estimate of 43.5%) on softening raw material prices, enhancement in export revenues and order mix. Ebitda margin expanded 273 bps YoY and 2 bps QoQ to 12.4% (above our estimate of 11.5%).

Ebitda jumped 22% YoY and fell 31% QoQ to Rs 868 million (broadly in line with our estimate). Exceptional items of Rs 282 million pertains to profit on sale of land. Consequently, PBT increased 38% YoY (down 13% QoQ) to Rs 1.1 billion, above our estimate of Rs 865 million.

Profit after tax soared 43% YoY (down 8% QoQ) to Rs 842 million, 29% above our estimate. Order intake during Q1 FY25 declined 19% YoY to Rs 8.9 billion (58% from domestic market), owing to 28%/3% YoY drop in domestic and export orders respectively.

Order backlog of Rs 40.4 billion (67% domestic) grew at 7% YoY and 5% QoQ as of June 30, 2024.

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