Praj Industries Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from Praj Industries Ltd (PRAJIND) Q1 FY23 Earnings Concall

Q&A Highlights:

• Saurabh Mehta of East Lane Capital asked about 1G opportunity in India currently. Shishir Joshipura CEO said that 1000 crore liters of additional capacity was needed to be created in the country when the program was announced. PRAJIND expects another 400-500 crore liters capacity to be built further to meet the EBP20 targets by 2025.

• Saurabh Mehta of East Lane Capital also enquired about 1G opportunity in Brazil and LatAm. Shishir Joshipura CEO replied Brazil is mainly a sugarcane based ethanol producing country. However, Brazil is expected to create capacity equal to 500 crore liter based on corn as feedstock in the next 4-5 years. In rest of LatAm, in general the trend is to move to higher energy security.

• Levin Shah with ValueQuest asked about order inflows for 1Q23 being low by 15% in bioenergy. Shishir Joshipura CEO replied that the company didn’t see any dip in order book or opportunity as it’s flowing now. The overall order book is at 1,094 crore. The decline is due to a large export order booked under the bioenergy segment which is not there in 1Q23.

• Dhananjai Bagrodia of ASK Investment asked that on the CBG plant, what’s the IRR the asset owners are getting. Shishir Joshipura CEO said there are a lot of variables to it so an exact number cannot be given. Now the CBG projects are in two-digit IRR range where it makes them commercially attractive and funded by bank.

• Naushad Chaudhary from Aditya Birla asked that for a 2 year time frame, what would the EBITDA margin. Shishir Joshipura CEO replied that kind of guidance cannot be given, but the company will surely see an improvement as all the orders are getting executed now.

• Naushad Chaudhary from Aditya Birla asked about the demand outlook on the high purity segment and growth expectation. Shishir Joshipura CEO answered that PRAJIND is seeing a peer movement around creating fermentation based capacity on the manufacturing side of the drugs. The market is expected to expand and will move in the positive direction.

• Levin Shah from ValueQuest asked if the company has received any fresh order on CBG. Shishir Joshipura CEO clarified that during 1Q23, the company has not received any new order.

• Levin Shah from ValueQuest also enquired about the competitive landscape on CBG. Shishir Joshipura CEO replied that if there is competition it’s a good sign and PRJIND added it has to see how the market play out and give a 3-4 year timeframe to arrive at a market share position.