Praj Industries: Future Growth Unfolds

Ashwin Thakker

— 2 min read
  • Consolidated income from operations in Q1 FY'26 stood at Rs. 6.4 billion, down from Rs. 6.99 billion in Q1 FY'25.
  • Profit before tax (PBT) for Q1 FY'26 was Rs. 96.09 million, a significant decrease from Rs. 788.8 million in Q1 FY'25.
  • Profit after tax (PAT) for Q1 FY'26 was Rs. 53.4 million, down from Rs. 841 million in Q1 FY'25.
  • Order backlog as of June 30, 2025, was Rs. 4.45 billion.
  • Q1 FY'26 EBITDA margin was 4.9%, noted as the lowest in 15-16 quarters.
  • Management anticipates EBITDA margins to recover to "high single-digit percentages" from H2 FY'26, viewing Q1 as an "aberration."
  • Committed to Vision 2030, aiming for significant growth despite current challenges.

Praj Industries reported a challenging Q1 FY'26, with consolidated income dropping to Rs. 6.4 billion and profitability significantly impacted. Despite immediate headwinds from geopolitical uncertainties and domestic liquidity issues, the company’s earnings call highlighted a strategic roadmap to navigate current challenges and unlock future growth opportunities across its bioenergy and engineering segments.

The domestic bioenergy sector, a core revenue driver, achieved India's EBP20 target ahead of schedule. However, this success has led to a temporary slowdown in new greenfield ethanol plant orders, as the industry awaits further blending mandates. Praj is strategically adapting by focusing on plant modifications and high-value co-products like Distillers Corn Oil and rice protein. Management expressed confidence that new government policies, such as Maharashtra's Rs. 28,000 crore bioenergy investment plan and the introduction of flex-fuel vehicles, will provide renewed impetus.

On the international front, while U.S. tariffs create near-term booking delays for the GenX facility, clarity on the 45Z tax credit policy is a positive development. Praj is actively exploring new geographies like Latin America, Europe, and the U.K., and diversifying into non-energy transition industries to utilize its GenX capacity. Sachin Raole noted,

"We are not only looking at U.S. and India, we are looking at other geographies where a lot is happening because those countries are looking for increased mandates also."

The company aims for international markets to compensate for domestic softness, ensuring overall order inflow remains robust.

Profitability Recovery & Diversified Growth Drivers

Praj's Q1 FY'26 profitability was significantly impacted, with EBITDA margin at a multi-quarter low of 4.9%. This was attributed to reduced volumes, increased site expenses from delayed project execution, and costs associated with the GenX facility without corresponding revenue. Sachin Raole described this as an "aberration," stating,

"Some pains might continue till quarter 2, but from quarter 3, from H2 onwards, we are not expecting this situation to continue."

The company expects margins to recover to "single-digit high percentages" by the second half of FY'26, driven by improved execution of existing orders and new international contracts.

Beyond traditional ethanol, Praj sees strong growth vectors in CBG, Sustainable Aviation Fuel (SAF), and bioplastics. The CBG business has a healthy pipeline, with a unique combined CBG and Bio-bitumen offering improving project ROI. Ashish Gaikwad emphasized,

"Our core fundamentals are strong, our growth vectors are intact, and therefore, we remain committed to our long-term growth vision."

The company is exploring opportunities in diesel-ethanol blending and high-purity solutions for new sectors like batteries and semiconductors, underscoring its commitment to long-term profitability and the Vision 2030 targets.

Praj Industries anticipates a significant rebound in performance from H2 FY'26, with Q1's low margins seen as a temporary setback. Strategic focus on new domestic blending mandates, international market expansion, and diversification into high-growth segments like CBG, SAF, and bioplastics reinforces its long-term growth trajectory. The company remains confident in achieving its Vision 2030 targets, leveraging its technological expertise to drive future profitability and market leadership in the bioeconomy.

Read more