Praj Industries, Aditya Birla Nuvo, Sintex,Tech Mahindra

Praj Industries, Aditya Birla Nuvo, Sintex,Tech Mahindra

Praj Industries, IPCA Labs, Motherson Sumi, Mahindra Holidays and Resorts

Praj Industries, IPCA Labs, Motherson Sumi, Mahindra Holidays and Resorts

Praj Industries, Reliance Infrastructure, SAIL, Torrent Pharma, UFlex, Voltamp Transformers

Praj Industries, Reliance Infrastructure, SAIL, Torrent Pharma, UFlex, Voltamp Transformers

Annual Report - Praj Industries - 2009-2010

PRAJ INDUSTRIES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

To
The Members of
Praj Industries Limited,

Your Directors are pleased to present the 24th Annual Report and the
Audited Statements of Accounts for the yearended 31st March, 2010, together
with the notice of the Annual General Meeting.

Praj Industries

Praj Industries

Praj Industries Ltd

Praj Industries

Praj Industries

Praj Industries

Praj Industries

Praj Industries

Praj Industries

Praj Industries

Bajaj Auto, Cement Sector, Jindal SAW, Container Corporation, Motilal Oswal, Praj Industries, Royal Orchid Hotels, TCS, Ultratech Cement

Bajaj Auto, Cement Sector, Jindal SAW, Container Corporation, Motilal Oswal, Praj Industries, Royal Orchid Hotels, TCS, Ultratech Cement

Praj Industries

We recommend a buy in the stock of Praj Industries from a short-term perspective. It is evident from the charts of Praj Industries that following a medium-term correction from June high of Rs 122 to July low of Rs 70, the stock found support at significant support level of Rs 70. Subsequently, the stock resumed its intermediate-term uptrend that has been in place since the March low of Rs 45. Moreover, it has been on a medium-term up trend from July low. On August 24, the stock surged almost 9 per cent, penetrating its 21- and 50-day moving averages. We notice that the volumes have been increasing for the past one week. The daily relative strength index (RSI) has entered in the bullish zone from the neutral region and the weekly RSI is heading towards the bullish zone. We are bullish on the stock from a short-term horizon. We expect the stock’s up move to continue until it hits our price target of Rs 112 in the approaching trading sessions. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 96.

via BL

Praj Industries - Annual Report - 2008-2009

Praj Industries - Annual Report - 2008-2009

Praj Industries

Shareholders can continue to remain invested in the stock of Praj Industries. While the company’s last quarter and full year performance have not been impressive, easing credit conditions worldwide and Praj’s established position in the field of bio-ethanol technology make the stock a good long term investment.

The stock was beaten down following the almost vertical plunge in crude oil price, led by concerns that low oil price may trim the spends by Praj’s user companies.

While that has proved to be true, what with the company seeing lower yearly and quarterly sales and tepid growth in order-book, what lends comfort is that the lower sales was driven more by the postponement or slowed investment by companies than any loss in sheen of investing in bio-ethanol facilities. At the current market price of Rs 72.6, the stock appears reasonably priced at about 10 times its likely FY10 per share earnings.

With the credit conditions beginning to look up, the company could see a revival of enquiries and order intakes in the coming quarters. Shareholders can wait a couple of quarters before adding or cutting their exposure to the stock. Till such time, trends in order inflows may bear a close watch.
US to go slow

The company has an entrenched presence in the global markets of the US, EU, Brazil and South-East Asia; exports make up for over 55 per cent of its revenues. However, with the recessionary trends in the US and EU, managing growth in these markets may no more be easy.

The management has said that the overall contributions from its US operations, where it had a couple of years back acquired the US-based CJ Schneider to establish manufacturing presence, is likely to drop this fiscal. That the existing ethanol plants in the US are not using up their capacities in full — a few have shut operations — also validates the anaemic demand trends in the country.

While, overall, the biofuels production levels in the US are expected to remain buoyant — likely production of 38 billion litres this fiscal as against 35 billion last year — Praj appears likely to see a slowing of its US operations. The management, however, expects to offset this by focusing more on the EU and domestic markets.
Growth avenues

Praj expects a significant increase in revenue contribution from the EU. EU’s directive that requires motor fuels to be 10 per cent ethanol-blended by 2020, starting 2011, offers an immense growth potential for Praj, which has a market share of about 30 per cent in the region.

This directive, when implemented in totality, will require an additional biofuel production of over 12-14 billion litres whereas Europe currently has a total production capacity of 3.5-4 billion litres only. In this regard, that the company has a presence in the EU through a joint venture BioCnergy Europa B. V., with Aker Solutions (60:40) lends comfort.

The joint venture company is operational and had previously even bagged an order (valued at Rs 120 crore) for the design of an ethanol plant for Vivergo Fuels.

But even as the favourable regulatory developments suggest a stable long-term revenue outlook for Praj, challenges such as funding constraints and fall in demand may weigh on performance in the near term.

It is in this context that the company’s diversified revenue base (in terms of global markets) provides relief. Praj’s strong presence in South-East Asia (50-55 per cent market share) and the domestic (75 per cent) market belie fears of any significant slowdown in revenues to a great extent. The company’s order books of over Rs 800 crore (roughly executable over the year) also assuage concerns.
Results card

Praj’s latest earnings scorecard appears to have mirrored the tepid business environment. For the financial year ended March-09, the company reported 10 per cent growth in sales, while its bottomline shrunk by 15 per cent.

Forex losses, higher depreciation and a three percentage points fall in operating margins to about 20.3 per cent were reasons for the fall in profits. On a consolidated basis too, the performance has been far from impressive. While the company managed to grow its topline by 26 per cent, its profits fell by bout 20 per cent.

For the coming year, the company expects more order inflows from the international markets vis-À-vis domestic markets. This may prove beneficial as international orders enjoy higher margins.

As for the existing contracts, the company may have little room to manoeuvre its margins since most of them are fixed price contracts. That the company books its raw material requirements as soon as it gets order also rules out any positive impact on the margins from a further fall in commodity prices.

Praj Industries

We recommend a buy on the Praj Industries stock. Praj Industries is in a structural bear market since the lifetime high of Rs 273 recorded in late-2007. This long-term downtrend has, however, lost momentum since October 2008 and the stock is attempting to consolidate sideways since then. The lower end of this consolidation range is around Rs 50 that corresponds with the trough formed in February 2006. A falling wedge pattern, which is a bullish reversal pattern, is also apparent in the daily charts.

Investors with a three-month horizon can buy this stock with a stop-loss at Rs 49. The medium-term outlook is encouraging and an up move to Rs 70 levels is possible in this period. Long-term investors can also consider investing in this stock, while retaining the stop-loss at Rs 44. Following a likely sideways consolidation in the range between Rs 55 and Rs 70, the stock has potential to reach Rs 110 over a longer time horizon.

Today's Pick - Praj Industries

We recommend a buy in Praj Industries from a short-term perspective. It is apparent from the charts that the stock has been on a medium-term uptrend from its March 2008 low of Rs 100, which is a significant support level. However, the stock encountered resistance at around Rs 220 in late May and declined to Rs 140 (retracing 61.8 per cent fibonacci retracement of its prior uptrend). Subsequently, the stock resumed its medium-term uptrend. We also notice an inverse head and shoulders pattern, (a continuation pattern in this scenario) spanning over the past two months. On July 23, the stock broke through the neckline of this pattern by gaining 4 per cent on above average volume. The stock is trading well above its 21 and 50-day moving averages. The daily relative strength index has entered into the bullish zone. The moving average convergence and divergence has entered the positive territory, reinforcing our bullish stance. Our short-term forecast of the stock is bullish. We anticipate the stock to move up until it hits our price target of Rs 225 in the upcoming trading sessions. Traders with short-term perspective can buy the stock, while maintaining stop-loss at Rs 190.

Shriram EPC, Indian Hotels, Marico, Praj Industries, Larsen And Tourbo

Shriram EPC, Indian Hotels, Marico, Praj Industries, Larsen And Tourbo

HDFC Securities - Praj Industries

HDFC Securities report on Praj Industries:

Key Positives

We see PRAJ transforming itself into a “Global provider” of end-to-end Ethanol distillation equipment and technology. In this process, we see the company exploring newer territories (Europe and Brazil, to be specific), which would tend to significantly improve our Conviction levels on PRAJ’s business growth. We built our opinion on PRAJ’s success in the last few years (Mainly in tapping the US markets).

We expect PRAJ to post >67% earnings growth on a CAGR basis over FY07-09E. We expect exports to increase further, as the company recognizes its US orders as revenues and garners increased business from other export markets, mainly European.

On the long term demand for fuel ethanol (production expected to cross 24 billion gallons by 2010 against 15.5 billion gallons currently), we remain bullish. We expect PRAJ to tap growth opportunities, going forward as it intends to gain a share in key markets including the US, Europe and Brazil, where it plans to enter soon. We believe PRAJ’s European and Brazilian forays will be the catalyst to propel the company, going forward. Our argument is based on the premise that these nations (mainly the US, Europe and Brazil), account for >80% of the current global ethanol production.

PRAJ recently inked a JV in Europe with Aker Kvaerner called BioCnergy Europe B.V. PRAJ owns 60% in the JV and Aker Kvaerner the balance 40%. We believe this JV is strategically advantageous for PRAJ, as this would help it tap the European bio-ethanol market as well.

Outlook & Valuation

We retain our conviction levels on PRAJ’s business growth, especially its strategy of focusing on inorganic and organic expansion initiatives. We believe this would help the company answer its growing business needs. We also believe, PRAJ’s nature of business provides an early mover advantage, in terms of entering newer territories and improving the confidence of the clients in its ability to execute projects. On a PE multiple of 27X & 20X its FY08E & FY09E earnings, we see PRAJ to be an OUTPERFORMER.

Praj Industries: Hold

Long-term investors can retain their exposure to the stock of Praj Industries, a leading solutions provider for ethanol plants, worldwide. The enhanced interest in bio-fuels the world over, thanks to a firm price outlook for crude oil over the medium term, and the mandatory ethanol blending in petrol in countries such as the US offer a robust demand scenario for Praj Industries.

Back home, Praj is also likely to benefit from the Government's proposal to enhance the ethanol-blended petrol programme to 10 per cent from the current 5 per cent. However, despite such a healthy growth environment, the valuation appears stiff.

At the current market price, the stock trades at about 31 times its FY-08 expected per share earnings on a fully diluted basis. Short-term investors can consider booking partial profits and re-entering the stock at lower levels. Medium/long-term investors, however, can hold on to the stock.

Scaling up globalLY

Revenue contribution from the export market is likely to scale up, given the increasing business opportunities in Europe and the UK, the US and Brazil. World ethanol production, as per industry estimates, is expected to surpass 90 billion litres by 2010. Globally, over 300-400 ethanol plants are likely to be installed over the next three-four years.

Given that Praj figures among the top five global companies involved in supplying equipment for distillery projects over the past two years, its ability to benefit from such a healthy demand scenario appears promising. It is also likely to capitalise on any opportunity that could arise from the ramp-up in corn ethanol capacities in the US.

The acquisition of the US-based CJ Schneider, an equipment provider, is also likely to expand the client base of American operations. However, it could well be two-three years before the investment in this acquisition starts to pay back.

In the European market, the EU member-states' proposal to reduce carbon emission by 8 per cent by 2012 also offers a substantial growth potential. Envisaging the upcoming demand, Praj has entered into a joint venture with the Netherlands-based Aker Kvaerner. Praj could leverage Aker's execution capabilities and the extensive European market knowledge, while using its own technology to cater to the European market.

Encouraged by the ethanol production scenario in Brazil (estimated to double production by 2010), Praj is scouting for acquisitions to set up an operational base in the country. This, when it happens, is likely to help Praj tap the huge ethanol production market in Brazil. Praj's ability to break into new markets also lends more visibility to its earnings. However, it could face stiff competition from established players in the respective markets.

Domestic ethanol scenario

Keeping in mind the current sugar glut, the Government's decision to blend ethanol with petrol is a welcome move. With sugar prices in a downturn, sugar companies could rely to a greater extent on by-products such as ethanol for revenues and profits; capex in this segment is, therefore, likely to continue. The introduction of ethanol blending is likely to prompt sugar mills to invest additionally in improving technology and infrastructure and in setting up appropriate processes. This would be a positive for Praj.

Additionally, any policy move allowing sugar companies to directly process sugarcane juice into ethanol, would improve the economics of ethanol production and generate additional orders for Praj.

However, given that the sugar industry is subject to various policy controls ranging from the Sugarcane Control Order to the Essential Commodities Act, the ethanol-blending programme is likely to remain heavily reliant on government policies. Furthermore, licensing and procedural requirements, levy of a plethora of taxes and restriction of inter-State movement of industrial alcohol also remain challenges for the smooth implementation of this programme.

The R&D wing of Praj, dedicated to ethanol technology, offers it a competitive advantage over other players. Its foray into biofuels technology could also offer a sizeable potential growth, given that most countries are major diesel consumers and nearly 60 per cent of the incremental growth in world transport fuel is diesel-based.

Additionally, the strategic setting up the Kandla SEZ, for the manufacture of large equipment is also encouraging.

Financials

For the quarter ended March 2007, Praj reported a 111 per cent increase in revenue on year-on-year basis, whereas the overall FY-07 revenues grew by about 127 per cent.

Operating profit margin stabilised on a year-on-year basis with a marginal 40 basis points jump to 13.7 per cent. However, the operating margins witnessed a decline of 10 per cent on a sequential basis, on account of a differing product mix.

This can be attributed to the realisation of a higher proportion of equipment technology revenues (during the third quarter), which yield better profitability for the company. The overall FY-07 earnings expanded more than doubled, aided by a higher volume growth and lower tax incidence.

Concerns

Since the European and American markets are likely to drive Praj's growth, any slowdown in the capacity expansion plans in these countries could affect the earnings for Praj.

This apart, any steep decline in crude oil prices could temper the interest in ethanol, which is mainly owed to its favourable cost economics. This could, in turn, discourage companies from setting up newer capacities for ethanol.

Global technology advances in biofuels could undermine Praj's competitive edge, if it does not keep up; this remains a key risk.

On the domestic front, any adverse changes in the government policy relating to export, import or pricing of sugar could have a negative impact on the company's earnings.

Emkay - Morning Notes, Praj Industries

Emkay - Morning Notes, Praj Industries

ABN Amro - Andhra Sugar, ACC, Edelweiss - Praj, KEC International, Siemens

ABN Amro - Andhra SugarABN Amro - ACC Edelweiss - Siemens - growth surprises, margins disappoint ; result update Q2FY07; maintain ReduceEdelweiss - KEC International - lighting up; result update Q4FY07; maintain Buy

Edelweiss - Praj Industries - equinox; result update Q4FY07; upgrade to Reduce