Praj Industries Share Analysis (Compiled By Ca Alok Jain After Refering to Company Presentation, Annual Reports, Con-call Transcripts and various News Point. This is for Education Purpose Only) 6. BON = . LCP-324.05 (18-08-2021) 52WH-407 (08-06-2021) . B2WL-63.55(09-09-2020) . EPS-6.19, PE-52.31, IPE-59.49, BV-44.82, No of Shares-18.37 Cr, FV-2, ROCE-15.25 . Shareholding-Promoters-32.85%, FIl-13.12, DII-7.13, NII-46.90, ResultsQ1FY22-Sale of 386 Cr Vs 567 Cr in Mar21 and 130 Cr in June20. Net Profit of 22.20 Cr Vs 52.01 Cr in Mar21 and Loss of (10.50) Cr in Mar20. . Breakthrough Order From HPCL- Praj Industries got breakthrough order from HPCL in Q4 for setting up CBG project of 6000 Cr which will complete in 12 Month. Praj with10. state-of-the-art RenGasTM technology developed using proprietary microbe to produce CBG from rice straw. Project capacity 35,000 MT of rice straw as feedstock to generate 5,250 MT of CBG annually. In addition, the project will also generate 23,000 MT high quality solid biomanure and 35,000 MT of liquid bio-manure for ferti-irrigation. . Orders O/S and Cash Position As on 31St Mar21- Order of 1748 Cr. In hand as on Mar21. Cash in hand of 476 crore. . Market Share in ethanol Plant Setup-Praj Industries have a market share of more than 60% in ethanol plant installing. Big Growth Trigger-Govt has set a target of 20% Blending of ethanol in Petrol by 2025. This will lead in adding 1,000 crore liter of capacity into the system. 2/3 of this capacity will come from starchy feedstocks, and one-third will come from sugary feedstocks.11. About Company-Bio-MobilityTM and Bio-PrismTM are the mainstays of Praj's contribution to the global Bioeconomy. Company has pioneered the Bio-mobilityTM platform that envisages use renewable biological resources to produce carbon-neutral transportation fuels across all modes of mobility i.e. Surface, Air and Marine. Building on the success of Bio-MobilityTM, Praj has embarked on a path to unveiled basket of technologies for production of Renewable Chemicals & Materials (RCM) its Bio-PrismTM portfolio. Produced from bio-based feedstock, RCM has the potential to replace most chemicals and materials currently sourced using fossil resources. Company has partnered with India's premier R&D institutions such as ARAI, NCL and with international organizations like DVO (USA), Gevo (USA), Lygos Inc. (USA) and Sekab (Sweden) to develop sustainable solutions. Praj is setting12. up India’s first batch of four commercial scale 2G biorefinery, first-of-its-kind integrated bioenergy complex and first demonstration facility for multi feedstock compressed biogas system. The PHS business is making strong inroads in vaccines and injectables segments of pharma industry through water and process solutions. Develop (Under Patenting) innovative technology to produce Bio-bitumen based on lignin-It achieved yet another milestone by developing innovative technology to produce Bio-bitumen based on lignin. The Netherlands-based Circular Biobased Delta, one of Europe's premier consortia to promote bioeconomy, has approved Praj's Bio- bitumen samples processed from Purified Lignin, as a part of their flagship CHAPLIN program. Lignin is one of the co-products resulting from the 2nd generation Ethanol plants, paper making and also from13. Compressed Bio-Gas plants. Bitumen is a black viscous mixture of hydrocarbons produced by fractionation of crude oil and has wide applications in road construction and roofing as binder. Praj has now developed a proprietary process (under patenting) to convert the crude lignin into Bio-bitumen which has potential to replace this fossil based bitumen and offer eco- friendly green bitumen. The binding and viscoelastic property of Bio- bitumen makes it useful for applications in asphalt. Under its flagship program CHAPLIN, it aims at stimulating the development and commercialization of Bio-bitumen as binder for use in asphalt so as to improve the greening approach in road construction while reducing CO2 intensity. IOCL Order of 226.90 Cr-On 01-01-2021-Praj Industries Ltd. has received an Order for Rs. 226.90 crores from Indian Oil Corporation14. 15. 16. Limited (IOCL), New Delhi, for execution of Zero Liquid Discharge System - “Water Treatment Package and Waste Water Treatment Package of Acrylic/Oxo-Alcohol Project at IOCL Dumad, Gujarat” MOU signed to deploy Praj's proprietary CBG technology for 9 additional projects to be set up by Leafiniti Bioenergy On 27-11-2020 MoU signed with Ministry of Petroleum & Natural Gas for setting up of CBG Plants-on 20th November 2020 with the objective to facilitate technological support to the entities for setting-up and commissioning of multiple number of eligible and qualified CBG Plants and their continuous operation for production of CBG and Organic Compost Manure under Sustainable Alternative Towards Affordable Transportation (SATAT). US returning to Paris agreement the carbon intensity reduction programs will come to the forefront and will17. 18. present a new business opportunity for Praj Industries. United States walking back into the Paris Agreement is a big, big push, positive push in that direction. Company is seeing a lot of activity emerging out of Canada where they have announced a very ambitious ethanol blending program Company latest offering along with Sekab is finding good traction in forest residue to ethanol space, especially in Nordic regions, and inquiries are progressing very constructively on this front. Engineering and PHS business-The Zero Liquid Discharge water business, the IOCL project execution has commenced. And company also bagged some key orders during the quarter and what was very heartening for company is that many of these contracts are repeat orders from there marquee customers which actually goes to prove that company19. 20. solutions are finding increasing acceptance with the customers. On PHS front-Company witnessing an increased activity level in entire complex injectable and vaccine space. These are the two spaces where company had positioned its solution very strongly over a period of time. They are now partnering in supplying of critical equipment to several leading players in the COVID vaccine development program. Three important new Areas Company working_on-One is entire microbiology-led additives, performance enhancers. Second is going to be the O&M services that it will provide to its customers. Third it has launched a very ambitious program for digitalization, where they will be able to bring a remote performance monitoring and enhancement system to its customers, where it will be able to look at different dimensions of plant performance and will be able to pinpoint the exact fault to the company and can do the timely correction. So, there will be a whole host of services that will emanate out of this. Company planing to take these three as a very focused business vertical going forward. and Export 28%) 1 . Bio Energy (Ethanol Plant) - 70% of Total Revenue . Engineering- 22% of Total Revenue . HiPurity-8% of Total Revenue Ethanol Plant Business Ls The Government has recently announced advancing of EBP 2020 targets by five years from 2030 to 2025. This is expected to create a demand of additional 1000 cr liters of ethanol per annum. . Ina significant move to encourage ethanol production, the Government further expanded the permissible feedstock by adding starchyfeedstocks to the list in the form of surplus grains. . Arobust and remunerative ethanol pricing model along with the interest subvention scheme is building a good momentum in creation of ethanol production capacity across the country. This policy will further add to building up the opportunity for distillery capacity expansion and extended fuel usage across the nation. . Time to setup ethanol Plant- Generally Company Takes 9 To 12 Month to setup ethanol Plant if Environment Clearance is already taken. . Starchy feedstocks of Grains are available through the FCI godowns in the country. And this Grain based ethanol manufacturing will help establishing Ethanol Plant all over India. The starchy feedstock will bring in a whole new set of promoters for the Ethanol project. These new promoters could be OMCs, could beenergy focused developers, could be renewable energy focused funds. . Oil Companies have already come up with a tender of 5 Yrs which gives a definitive demand for ethanol and will help in Increasing Ethanol Plants. More and more sugar is now getting diverted to production of ethanol, it is also a very high value accretive activity for the sugar mills. . The grain-based plants or the starchy feedstock-based plants are not seasonal in Nature in Comparison to sugar based ethanol Plant. Company Has Been Building starchy feedstock plants outside India for many years. So they have tremendous experience into building of these plants. So that experience will help it in building world-class plants in India based on starchy feedstock as well for Indian customers. Inquiry have more than doubled or even quadrupled on the starchy feedstock side. In India presently there is capacity of10. 11. 350/400 Cr Litters based on Sugar Syrup. . Government approved 400-plus applications for the interest subvention for setting up of ethanol Plant. Two- thirds of the capacity will be built around starchy feedstocks and one-third will be built around sugary feedstock. . Cellulosic feedstock based ethanol Plant- Company is building 3 Plants based on Cellulosic feedstock. RED II program in Europe which is actually focused on cellulosic feedstock. Company Has Technology to Make Plant for making ENA or Ethanol interchangeably No Change Required in Existing Vehicle for using Blended Petrol- Brazilian Authority have demonstrated that they have gone up to 27% blend with no change in the Vehicle. And going forward automobile manufacturer can tune engine at E-20.13. 14. 1. Setup- One estimate says addressable opportunity would be around Rs. 14,000 crore in Next 4-5 Years for all. Company has already contracted to build 100 crore liters capacity in the country. Sugar companies are planning to have a bolt-on module for using starchy feedstock in the non-sugar season, non-seasonal period. Cost of starch-based plant will be higher than for a sugary based plant. Company bagged the prestigious breakthrough order from HPCL during the quarter for setting up the CBG project at Badaun in Uttar Pradesh. Prqj is offering its state-of- the-art RenGas process to produce CBG from rice straw using proprietary microbes. The project has a capacity to process 35,000 metric tonnes of rice straw as feedstock and will generate over 5,000 metric tonnes ofil CBG annually. In addition, the project will also generate 23,000 metric tonnes of high-quality solid bio- manure and over 35,000 metric tonnes of liquid bio-manure for ferti- irrigation. . Also received a contract for setting up a CBG project for a distillery spent wash in Western India with the capacity to produce 10 metric tonnes of gas per day. . Praj is very proud to have bagged project for CBG development from three independent and highest potential feedstocks, namely, Press Mud, Rice Straw and Distillery spent wash. . Company in final stages of commissioning of India's first 200 TPD Press Mud cum Bagasse based CBG project at our customer plants based in Uttar Pradesh. . The ecosystem for the CBG is continuing to develop. And company hope that over a period of time the system will develop and become arobust system, just the way ethanol system is over a period of time. . There is a big movement right now out of state of Punjab, where Punjab Energy Development Authority has already awarded several contracts and tenders and licenses for rice straw-based gas production. . Big Demand will come from ESG funds, renewable development companies, individual entrepreneurs. So, different dynamics for people who will eventually sell the CBG, because that obviously is a very different ballgame, the CBG network and oil marketing companies, retail outlets and things like that. . CBG is also finding a very big traction now with the CGD networkers as they are built over a period of time. The city gas distribution systems, so CBG chain on the supply side, OMCs will have a big role to play on the retail side, the CGD network coming into play.Engineering Segment 1. RCM Opportunity- The first part of the RCM is the core products that will come out of cellulosic ethanol system, the 2G plants that company is commissioning. Company has developed two very strong co- products that could be of great use for the country and for the industry 2. Bitumen Opportunity- Company has developed a co-product called bitumen. Bitumen is completely imported today in India. But now company developed a process that can take the lignin and valorize to produce the bitumen. And this will becomes a very good source for country to substitute an imported product called bitumen. 3. Lignosulfonates Opportunity- Company is also developing this new Product. Today country is importing this product. Lignosulfonate is a material that is used for concrete mixing, when you build concrete from cement, this is the element thatactually holds the moisture and the cement together. So, that allows the bonding to take place between water and cement in the different elements. There is a co-product cycle of RCM that will go out in the field and that will help our customers, existing as well as the new ones . Zero Liquid Discharge business systems business really beginning to gain traction now because of strict govt regulations. Corporates are more conscious about not letting out any effluent liquid out of their operations. where we have been focusing on complex injectables as a space to hone our offering over a period of time. And with the advent of the vaccine capacities in the country, and we are part of many of those efforts now. We are seeing a good traction build on complex injectable space and vaccine space and our play there in as well.6. PHS Business-Brewery currently not much can be said. Company have a dominant position in the business, but right now the business itself is not moving because it is ad pandemic impacted industry. Opportunities in sustainable aviation fuel or methanol as a fuel for coastal with GEVO for Aviation Fuel- On sustainable aviation fuel side, its technology co-developing with GEVO with a specific focus on the India market. Company has understood the dynamics of it and it is an alcohol-to-jet fuel, as it is called ATJ. The alcohol-to-jet route will play a very big role, because in India, the route of alcohol-to-jet actually utilizes the current infrastructure that we have so strongly in place with our sugar mills, the ethanol production plants that are set up with them, the grain-based plants that we come up, all of them will become the feeder plants. So, it will be a different molecule of alcohol that we produce inthese plants. And it is a two-stage process, and then the refineries will refine that alcohol to the aviation fuel step. So, two stage process, but very, aligned to what our current infrastructure is. And company is developing this technology with a view that its existing customers should be able to accommodate with minimal modifications and start producing the required alcohol variant as and when the opportunity opens up. 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