Praj Industries Pins Threefold Revenue Rise Hopes On Exports

The growing focus on energy transition and climate action, as well as the low-carbon ethanol focus around the world presents Praj Industries Ltd. with future order opportunities from the US, Europe, and Brazil.

The company's management is targeting to increase its export revenue share from 19% currently to 50% by 2030, based on robust opportunities.

Praj Industries began as a supplier of an ethanol plant, but over the years, the company has diversified and now provides various solutions with a focus on the environment, energy, and agri-process industries.

The company's product portfolio is diversified into bioenergy, Praj HiPurity systems, critical process equipment, and wastewater treatment.

Praj Industries stands optimistic about trebling its revenues by fiscal 2030, with revenues totaling around Rs 10,000 crore. It expects international orders to be one of the key growth drivers going forward.

The company aims to garner a 25% revenue share from international markets in fiscal 2025 and expects to expand its export revenue share to 50% by fiscal 2030, which would amount to around Rs 5,000 crore. Management has also stated that an increase in the export share would lead to margin expansion.

The company also expects its compressed biogas business to constitute 20–30% of overall revenue.

The bio-energy segment accounted for 76% of Praj Industries' order backlog as of the fourth quarter of fiscal 2024. Management has noted strong international opportunities and expects a surge in bio-energy export orders. The rise in orders from the US and Europe is expected due to the growing need for low carbon ethanol in those areas. Furthermore, the company also expects higher orders from Brazil, which is the sugar and ethanol capital of the world.

Management has noted that Brazil is now also moving to starch-based ethanol, which presents the company with a huge opportunity for grain-based ethanol plants. The company, in its fiscal 2024 earnings call, also noted the successful handover of Praj Industries' first grain-based ethanol project in Brazil. The company has also signed one more contract for a grain-to-ethanol plant with BE8, a global renewable energy company. The engineering activity for the plant is to commence in first quarter of fiscal 2025, followed by construction activities in the second quarter.

Management has also highlighted a shift in the domestic order book. Due to the Indian government's ethanol blending policy in December 2023, the company is seeing a shift in orders from sugary feedstock based plants to starchy feedstock plants. 90% of the current domestic order intake comes from starchy feedstocks.

Praj Industries plans to launch its international compressed bio-gas business in the next 6 to 8 months. Due to its abundant resources, the company is eyeing Brazil again as a market with large potential.

On the domestic front, Praj Industries has successfully commissioned three compressed biogas plants, or CBG, and has orders for another five. The company is constructing rice straw-based CBG plants, and plans to build Napier grass-based CBG plants in the future. These plants are based on agricultural leftovers.

The company expects an internal rate of return of 13–18% on its CBG plants. Management has also highlighted a potential opportunity to build 4,000–5,000 CBG plants, each processing 20 tonnes of material per day.

Praj Industries' GenX business focuses on modularised low-carbon fuel projects, particularly those related to Sustainable Aviation Fuel, or SAF. The business's commercial production began in February 2024, and work on small equipment orders has already begun.

The GenX facility will be entirely export-oriented and expects order booking to start in September, the management said.

Execution of orders is slated to begin in fiscal 2026, during which the company expects capacity utilisation to touch 50–60%. Optimum capacity utilisation is expected in fiscal 2027. At 100% capacity, the facility is expected to generate Rs 2,000 crore in revenue.

Praj Industries aims to grow its contribution from its services business to 10% of total revenues, compared to 4% currently. A higher share of service businesses will be margin-accretive, the management said.

The company plans to focus on service offerings like consumables, performance enhancers, and digital solutions. It is also building distribution channels across global markets.