My Best Pick 2021

Jigar Shah backs a biotech pioneer in the global shift towards cleaner fuels

Praj Industries is right in the centre of India’s bio-economy revolution and has earned an international reputation too 

 

 

 

 

 

 

 

Over the past four months, the engineering and consulting firm Praj Industries has done well in the stock market — its stock has more than doubled in value, climbing to levels seen more than a decade ago. 

This impressive performance is largely because of the Indian government’s (GoI) aggressive policies on ethanol blending, including advancement in the deadline for increasing the ethanol percentage in the petrol mix, to 10% by 2022 and 20% by 2025. This would mean a 3x increase in capacity of ethanol-producing refineries to 10 billion litres, of which 40% could come from sugar/molasses and the rest from grain. Praj, which makes most of its revenue from bioenergy (61% in FY20) and engineering (28%) verticals (See: Nuts and bolts), possesses the best technology for both.

If the blending target is met, Praj could have a business opportunity worth Rs 140 billion in the next three to four years versus its current order backlog of Rs 16.7 billion. Its order book has already picked up over the past one year to the highest level in five years (See: Gaining momentum).

‘Bio-economy’ charged

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