At a glance
Praj Industries — the biotech engineering star that once raced on the ethanol boom — is now facing a tough question: what next? After posting ₹3,228 crore in FY25 revenue and ₹219 crore in net profit, the company saw a 27% YoY profit drop and is now trading 40% below its 52-week high. With SAF deals, global biorefinery orders, and government mandates still backing it, is this just a slowdown… or the end of the sugar high?
🧬 About the Company
Praj Industries Ltd, founded in 1983 and headquartered in Pune, is a global process solutions company with expertise in:
- Bioenergy (especially ethanol)
- High-purity systems (for pharma, biotech)
- Wastewater treatment
- Brewery & beverage solutions
- Skid-based critical process equipment
Their DNA is sustainability — converting agricultural residue to energy, cleaning wastewater, and enabling cleaner fuel production. Think of them as India’s clean-tech lab coat guys… only they’re listed and profitable (well, mostly).
👤 Key Managerial Personnel (KMP)
- Pramod Chaudhari – Executive Chairman, often considered the face of India’s ethanol engineering revolution.
- Shishir Joshipura – CEO & MD, bringing global process industry expertise, especially from his earlier stint at Thermax.
- Backed by a technically strong board, though promoter holding is modest at 32.8%.
📊 FY25 Financials
| Particulars | FY24 | FY25 | YoY Change |
|---|---|---|---|
| Revenue | ₹3,466 Cr | ₹3,228 Cr | -6.9% |
| EBITDA | ₹372 Cr | ₹325 Cr | -12.6% |
| EBITDA Margin | 10.7% | 10.1% | ↓ |
| Net Profit | ₹283 Cr | ₹219 Cr | -22.6% |
| EPS | ₹15.4 | ₹11.9 | ↓ |
| Dividend Payout | 39% | 50% | ↑ |
⚠️ Net profit has dropped for the first time since FY20.
📉 Quarterly Trend – Cracks in Q4
| Quarter (₹ Cr) | Q4 FY24 | Q4 FY25 | YoY Growth |
|---|---|---|---|
| Revenue | ₹1,019 | ₹860 | -15.6% |
| EBITDA | ₹131 | ₹74 | -43.5% |
| Net Profit | ₹92 | ₹40 | -56.7% |
Margins in Q4 collapsed to just 9%, suggesting order delays or pricing pressures in the ethanol segment.
💼 Business Segments & Developments
1. Bioenergy (Core Segment)
- Drives majority of revenues.
- Focus on 1G & 2G ethanol plants (sugarcane + agri waste).
- Announced 600 m³/day ethanol biorefinery in Paraguay.
- Govt SAF (Sustainable Aviation Fuel) MoUs signed with IATA and ISMA.
2. Praj HiPurity Systems
- Serves pharma and biotech cleanrooms.
- Saw flattish growth as capital expenditure in pharma slowed.
3. Wastewater & Brewery Systems
- Stable but small contributors (~10–15% of revenue combined).
🧮 Forward-Looking Fair Value Estimate (FY27E)
Assumptions:
- Revenue CAGR: 10% (conservative)
- EBITDA margin: ~11%
- Net profit margin: 7%
- FY27E EPS: ~₹15.5–₹16.5
- Fair P/E: 32–36× (considering clean-tech + engineering premium)
➡ Fair Value Range: ₹496 – ₹594
(Current CMP: ₹506 — near lower end)
📈 Estimated Growth Outlook
- Biofuels push is policy-driven: India’s 20% ethanol blending by 2027 is still on.
- Global orders (like Paraguay plant) suggest export growth potential.
- SAF (Sustainable Aviation Fuel) is Praj’s next moonshot — if regulations go global, this could be a big second wind.
But right now, execution is everything. And Q4 was a stumble.
🧐 EduInvesting Take
Let’s not sugarcoat it — Praj is coming off a sugar rush.
Yes, they’re clean-tech royalty. Yes, they’re future-ready. But this quarter? Ugly.
Margins dipped, net profit dropped 57%, and the stock’s been hammered 26% this year.
But here’s the twist — most of this looks temporary. Capex cycles are delayed, not cancelled. And the ethanol story isn’t dead, it’s just hungover. SAF could be the next ethanol. And when that party starts, Praj’s the DJ.
Verdict: Not a multibagger right now. But not dead either. It’s what you call… “strategically snoring.”
🚩 Risks & Red Flags
- Low Promoter Holding (32.8%) – not always bad, but makes hostile takeovers easier.
- Volatile Working Capital – WC days shot up to 78 days, up from 19 last year.
- Lumpy Orders – Q4 sales fell 15%, suggesting project delays.
- High P/E (46.6×) – no longer cheap for an earnings-decline year.
🧂 TL;DR — The Biofuel Buffet Hangover
Praj Industries isn’t crashing — it’s consolidating after a sugar high. It’s a solid long-term business in a temporarily tight spot. Execution over the next two quarters will define whether this is a pause… or a pothole.
And if aviation biofuel becomes mainstream, you’ll wish you had boarded this ethanol train when it was parked.
Author: Prashant Marathe
Date: 13 June 2025
Tags: Praj Industries, Biofuel, SAF, Ethanol Blending, Clean Tech, Engineering, Q4 Results, FY25 Earnings
