Praj Industries - A Proven Player With A Long Growth Runway: Systematix Initiates Coverage

Systematix Research Report

Praj Industries Ltd. is a play on the rising demand for bioenergy driven by increasing awareness on climate change and strong global mandates. India’s Ethanol Blending Program aims at achieving 20% blending (E20) by 2025-26 from 10% currently. The capacity needs to increase two times over FY22-25E to meet the rising demand, necessitating a capital investment of ~Rs 300 billion.

New opportunities are ushering in the form of ethanol blending in diesel and flex fuel engines that essentially work with ethanol blend in excess of 20%.

Praj Industries, a market leader, holds a dominant more than 50% share in 1G ethanol, and it is the only player in 2G ethanol. The company is also scaling up its non-bioenergy business (30% of FY22 sales) by-

1. establishing a strong foothold in modularisation business for its critical process equipment and skids segment,

2. expanding offerings from its HiPurity business, and

3. leveraging its multi-disciplinary engineering strengths and expertise in manufacturing to tap export opportunities.

We believe Praj Industries’ key strengths lie in its-

• superior fundamentals,

• dominant market share,

• fast growth, and

• higher return profile.

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