In its latest March 24, 2025 update, Prabhudas Lilladher has reiterated a ‘Buy’ rating on Praj Industries, maintaining the target price at Rs 751. Despite near-term challenges in the compressed biogas (CBG) segment and geopolitical uncertainties surrounding U.S. tariffs, the brokerage is optimistic about Praj’s long-term trajectory. The report highlights the upcoming GenX facility, expanding export demand, and strong prospects for ethanol blending mandates as key growth drivers. The company continues to lead the domestic ethanol market with a 50–55% share while aggressively expanding its footprint across sustainable aviation fuel (SAF), biopolymers, and 2G ethanol solutions.

GenX Facility Set to Unlock Rs 25 Billion Revenue Potential

Praj’s GenX plant, designed as a futuristic manufacturing hub, is expected to begin commercial contributions by H2FY26.

Despite a six-month delay due to land acquisition hurdles, the facility is projected to become a cornerstone of Praj’s manufacturing ecosystem:

Initial phase to support order bookings from Q1FY26

Peak annual revenue potential: Rs 10–25 billion

Minimum order size: Rs 1 billion

Full ramp-up includes seven production sheds

This state-of-the-art facility is envisioned to enhance manufacturing flexibility, scale, and margin potential, fortifying Praj’s long-term capacity planning.

CBG Sector Faces Delays, but Pricing Reforms Offer Relief

The CBG segment remains under pressure, but structural reforms are underway to improve commercial viability.

Management cited concerns over fuel quality, operational risks, and economics of blending as reasons behind project delays. However, two key developments offer upside:

New pricing mechanism: CBG rates now linked to 80% of CNG (~Rs 60–62/kg), up from Rs 42–43/kg

Technology edge: Praj’s multi-feedstock capability and potential to produce bio-bitumen provide differentiated value

With government focus on clean energy and blending mandates, the segment is likely to rebound, and Praj is strategically positioned to capitalize.

Global Ethanol Demand Keeps Momentum Alive

Praj is witnessing growing international interest in 1G ethanol from Latin America, including Brazil, Argentina, and Panama.

This coincides with India’s aggressive domestic push toward ethanol blending, which reached 19.6% in January 2025. The next target—25% ethanol blending—is expected to unleash a new round of project bookings.

Furthermore, the company’s ultra-low carbon ethanol technology faces minimal impact from potential U.S. reciprocal tariffs under the Trump doctrine. While decision-making might slow, key SAF-linked commitments remain intact, ensuring continuity in the American market.

Financial Snapshot: Margins Improving, FY27 a Breakout Year

Margins are projected to expand meaningfully from FY26 onwards, driven by export-led growth, value-added services, and economies of scale.

Valuation Remains Attractive Amid Long-Term Growth Narrative

Prabhudas Lilladher continues to value the stock at a P/E multiple of 33x on Sep’26 earnings, justifying a target price of Rs 751. Current valuation metrics:

• FY27E EV/EBITDA: 13.6x
• FY27E EV/Sales: 1.7x
• Dividend Yield: 2.3%

Given its leadership in clean tech, export readiness, and visible revenue streams, the stock remains attractively priced for long-term investors.

Balance Sheet and Cash Flow: Debt-Light and Efficient

Praj Industries continues to operate with a net cash position, reflecting prudent capital allocation. FY27 projections:

Net Debt/Equity: –0.4x (net cash)

Free Cash Flow (FCF): Rs 3,011 million

Dividend payout: Rs 13.4/share

The business model is capital efficient, with strong working capital discipline and minimal leverage risk.

Stock Outlook and Investor Strategy

The stock has shown moderate near-term volatility but holds strong long-term promise:

• Support Level: Rs 575
• Resistance Zone: Rs 640–660
• 52-week Range: Rs 462 – Rs 875

Any dip near Rs 600 offers a compelling accumulation opportunity, with medium-term upside to Rs 751 and long-term tailwinds from export acceleration.

Long Term View: Structural Story with Global and Domestic Levers

Praj Industries is evolving beyond its ethanol legacy into a full-spectrum bio-economy enabler. With the GenX facility coming online, growing traction in international markets, and technology-led expansion into SAF and CBG, Praj’s growth vectors are well-diversified.

Prabhudas Lilladher’s reaffirmed ‘Buy’ call and Rs 751 target reflect the company’s earnings visibility, balance sheet strength, and strong execution pipeline.

For investors seeking long-term exposure to India’s cleantech infrastructure buildout, Praj Industries remains a high-conviction, innovation-driven bet.