Praj Industries is tapping new growth avenues in related areas to cut dependence on its core ethanol business
After losing two years to bad business conditions ethanol solution provider Praj Industries has made a comeback in the first half of FY12. The company is tapping a number of new growth avenues to bring down dependence on the ethanol business. As business conditions for its core business improve and the new businesses achieve critical mass, Praj could be back in favour with the market.
BUSINESS Pune-based Praj Industries is among the world's top 5 engineering and technological solution providers for fuel, industrial ethanol and breweries. Many countries across the world have mandated ethanol blending with gasoline, which has increased the demand for ethanol plants.
The company derived 51% of its FY09 revenues from its international business, which dropped to 30% in FY11.
GROWTH DRIVERS The company has now diversified into a few related businesses. In Kandla, it has set up a facility to contract manufacture heavy engineering goods for third parties. It has also started taking up projects in treating industrial waste water or zero liquid discharge plants. It is setting up a unit at Jejuri, Maharashtra, to manufacture bio-consumables.
The company was hitherto undertaking all these activities only for its clients in the ethanol and brewery industries. It has now decided to leverage these capabilities to cater to other companies as well. Its orderbook stands at 900 crore to be executed in one year. This is 1.5 times its revenues of FY11 and gives visibility to growth.
The company plans to grow its non-ethanol business to 25% of total revenues by FY13. Praj is undertaking intensive research for a break-through technology to develop a commercially-viable cellulose-toethanol technology.
FINANCIALS After growing at almost 50% annually between FY04 and FY09, the company's performance was hit by the global economic turmoil. For two consecutive years the company's sales fell to touch 552.9 crore in FY11.
The company's revenues at 393.2 crore in the first half of FY12 were double that of the corresponding period last year. Net profit was 77.6% higher at 34.2 crore.
As at September 2011, it had cash & bank balance of 460 crore with no debt.
VALUATIONS: Praj Industries is currently trading at a price-to-earnings ratio of 20.3 on profits for the trailing 12 months. Its priceto-book-value ratio stands at 2.3 times. More than one-third of the company's market capitalisation is represented by its cash and liquid investments.
BUSINESS Pune-based Praj Industries is among the world's top 5 engineering and technological solution providers for fuel, industrial ethanol and breweries. Many countries across the world have mandated ethanol blending with gasoline, which has increased the demand for ethanol plants.
The company derived 51% of its FY09 revenues from its international business, which dropped to 30% in FY11.
GROWTH DRIVERS The company has now diversified into a few related businesses. In Kandla, it has set up a facility to contract manufacture heavy engineering goods for third parties. It has also started taking up projects in treating industrial waste water or zero liquid discharge plants. It is setting up a unit at Jejuri, Maharashtra, to manufacture bio-consumables.
The company was hitherto undertaking all these activities only for its clients in the ethanol and brewery industries. It has now decided to leverage these capabilities to cater to other companies as well. Its orderbook stands at 900 crore to be executed in one year. This is 1.5 times its revenues of FY11 and gives visibility to growth.
The company plans to grow its non-ethanol business to 25% of total revenues by FY13. Praj is undertaking intensive research for a break-through technology to develop a commercially-viable cellulose-toethanol technology.
FINANCIALS After growing at almost 50% annually between FY04 and FY09, the company's performance was hit by the global economic turmoil. For two consecutive years the company's sales fell to touch 552.9 crore in FY11.
The company's revenues at 393.2 crore in the first half of FY12 were double that of the corresponding period last year. Net profit was 77.6% higher at 34.2 crore.
As at September 2011, it had cash & bank balance of 460 crore with no debt.
VALUATIONS: Praj Industries is currently trading at a price-to-earnings ratio of 20.3 on profits for the trailing 12 months. Its priceto-book-value ratio stands at 2.3 times. More than one-third of the company's market capitalisation is represented by its cash and liquid investments.
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