Praj had a good quarter with revenue growth of about 21% and EBITDA margin expansion of 148bps YoY to 10.4%. The orders for FY23 increased by 17% YoY to Rs50.6bn, driven by Bio Energy segment’s 1G ethanol orders (up 22%-Rs33bn). Recently, Praj collaborated with IOCL and Air Asia for commercial flight trials with a blend of Sustainable Aviation Fuel (SAF). The company is also planning to invest in a modern manufacturing facility for Energy Transition and Climate Action (ETCA) segment (Rs1bn) and a demo plant for Polylactic Acid (PLA) for commercialization of bioplastics (Rs600mn).
Praj is expected to benefit from upcoming opportunities due to its strong leadership, global presence, and future-ready technologies. The company’s revenue/PAT CAGR is estimated to be ~8%/16% from FY23-25E. The stock is currently trading at PE of 23x/21.3x FY24/25E. The ‘BUY’ rating is maintained with a revised TP of Rs475.
Praj reported strong revenue growth of 20.8% YoY to Rs10bn, owing to strong execution in Bioenergy segment (up 31% YoY to Rs7.1bn). Gross margins came in at 41%, and EBITDA grew 40.8% YoY to Rs1bn. PAT grew 52.9% YoY to Rs881mn aided by higher other income.
Order inflows for Q4FY23 came in at Rs10.4bn, down 5.8% YoY, with the order book standing healthy at Rs34bn, comprising of Bio energy (84%), Hi-Purity (5%) and Engineering (11%). Within exports market, Low carbon ethanol is emerging as a good opportunity in the USA.
