Revenue declined by 0.95 % YoY to Rs. 209.3 crs for 4Q 09, whereas it increased 10.12% to Rs. 774.4 crs in FY 2009.

Operating profit declined by 8.94% y?o?y to Rs. 59.7 crs for 4Q 09, while it increased 26.2% to Rs. 182.0 crs for the year driven by decline in raw material costs. Raw material costs as a percentage of revenue declined from 52.3% in FY 2008 to 49.5% in FY 2009

Depreciation increased by 45.3% in 4Q 09. Whereas in FY 2009 it increased by 47.7% to Rs. 8.2 crs.

Other income declined by 18.7% in 4Q 09 to Rs. 4.34 crs. Whereas In FY 2009, other income increased by 43.1% to Rs. 21.7 crs.

In 4Q 09, the company’s reported PAT declined by 52.9% to Rs. 27.52 crs primarily driven by lower operating profit and a forex loss of Rs. 9.7 crs. The company also incurred an extraordinary loss of Rs. 11.17 crs related to decline in the value of its investment in its overseas subsidiary. For FY 2009, reported PAT declined by 15.5% to Rs. 129.8 crs due to forex loss of Rs. 23.1 crs during the year.

Adjusted PAT declined by 19.9% in 4Q 09 to Rs. 48.4 crs. Whereas for FY 2009, adjusted PAT increased by 25.5% to Rs. 164.1 crs.

Company reported EPS of Rs. 1.5 for Q4FY09 as compared to Rs. 3.2 in Q4FY08. For FY 2009, the company reported an EPS of Rs. 7.0.

The share is trading at PE 9.6x and EV/Sales of 1.38X for FY09.

Key Developments:

- Praj has an order book of Rs. 800 crs to be executed over the next 12 months

- The company has cash & cash equivalent of Rs. 300 crs in its balance sheet as on 31st March 2009

- EU Parliament has passed the mandates and obligations of member states for adoption of the Renewable Energy Directive (RED). The RED mandates 10% (by energy content) biofuels blending in all transport fuels by the year 2020, starting 2011. This will result into demand for an additional 12?14 bn litres capacity for bioethanol in Europe over the next 7 years

- Praj continues to maintain its leadership position in the domestic market as well as some key international markets. The company has a market share of more than 75% in India. Whereas it has a market share of 35% in Europe. In South East Asia it has a market share of 50?55% and in South and Central America it has a market share of 50%.

Outlook:

Praj declared decent set of results for FY 2009. However results for Q4 09 were subdued. The company reported an order book of Rs. 800 crs to be executed over the next 12 months. Praj has been facing a slowdown in order intake primarily due to slow down in economic activities and tightening of credit markets. Going forward, the company expects growth to be driven primarily by mandates set by the government pertaining to use of ethanol as a fuel. We believe in the short term the company would continue to witness slowdown in order intake. However in the long run we expect the company to do well as economic activity picks up globally and on the back of increasing investments in research & development activities. The stock is currently available at reasonable valuations at a PE of 9.6x and EV/Sales of 1.38X based on FY09 results.