Praj Industries Outlines Its ‘String Of Pearls’ Strategy

Praj Industries Ltd. targets to be a “string of pearls” company with multiple segments driving its earnings.

From ethanol and bioenergy to wastewater treatment, the company sees all its businesses contributing, Shishir Joshipura, managing director and chief executive officer at Praj Industries, said in an interview with BloombergQuint’s Niraj Shah.

Ethanol

India’s E20 plan envisaging 20% blending of ethanol by 2025 in petrol is also now the company’s core programme, Joshipura said. Additional orders that need to be put out for machinery would total up to roughly Rs 14,000 crore by then, he said.

Praj Industries will be able to maintain about two-thirds of its market share in the business, according to Joshipura. Investments in technology over the years will help the company keep its edge and the company would be able to bag at least two-thirds of the orders, he said.

If blending in diesel starts as well, it will be an added opportunity for Praj Industries and other companies in this segment.

Biogas
India plans to increase the share of gas in the nation’s fuel mix. Under the government’s Sustainable Alternative Towards Affordable Transportation programme, India seeks to set up 5,000 plants generating biogas of stricter specifications than CNG, he said.

Wastewater
Zero liquid discharge is becoming an important aspect of wastewater disposal and Praj Industries’ role is well established, Joshipura said.

“I am not aware of any other water treatment company in India, which has its core strength in microbiology like Praj,” he said.

Joshipura said if the last quarter of FY21 is a barometer of what the company can consistently do, the company will not need to incur very large capex costs to increase output. It, however, will continue to invest heavily in R&D to stay ahead of the race in the field of sustainable bioenergy, he said.

Kotak Securities estimates that Praj Industry can double its revenues and treble its profits by FY23. In FY21, the company clocked a revenue of Rs 1,305 crore and a net profit of Rs 81 crore.

Joshipura said that kind of growth is possible if the ecosystem develops as it is expected.

The stock has already surpassed Kotak's 12-month price target of Rs 315 and Phillip Capital's Rs 320 apiece. Shares of Praj Industries have surged 175% so far this year. The benchmark Nifty 50 is up about 9% year to date.