Praj Industries

Praj Industries reported a consolidated income from operations of ₹841 crores in Q3 FY26, remaining stable compared to ₹842 crores in Q2 FY26. However, PBT before exceptional item^📎s declined to ₹21.6 crores from ₹29.6 crores QoQ. A significant exceptional item^📎 of ₹3,344 million, arising from new labor codes for gratuity and leave liabilities, led to a negative PAT of ₹-12.4 crores for the quarter. Overall margins were impacted by approximately 1% due to a reduction in export revenue and a shift in the export mix towards lower-margin projects.

The company secured new orders worth ₹914 crores in Q3 FY26, with a strong domestic contribution of 68%. The total order backlog as of December 31, 2025, stood at ₹4491 crores, with 66% originating from domestic clients. Bio-energy accounted for 45% of the quarterly order inflow, while engineering and PHS businesses contributed 42% and 13% respectively. Management noted that execution periods for new brewery and ZLD projects are typically 12-14 months, with 50-60% of the new CCUS order expected to convert to revenue in FY27.

Praj is experiencing a slowdown in 1G domestic Greenfield ethanol projects due to existing supply-demand imbalances and funding challenges faced by customers. Consequently, the company is prioritizing Brownfield solutions, focusing on operational efficiency improvements and value-added co-products like distillers corn oil (DCO), where it has secured a good number of orders. In the 1G international market, Praj is actively engaged in countries like Indonesia, Panama, and Argentina, which have announced plans to increase biofuel blending mandates.

Significant progress is being made in the Compressed Biogas (CBG) segment, with Praj demonstrating technology performance on various feedstocks, including Press mud, and commissioning two new plants using Napier grass and rice straw. The Union Budget 2026's announcements, including phased mandatory blending of CBG into CNG and excise duty exemptions, are expected to boost the sector's commercial viability. In Sustainable Aviation Fuel (SAF), Praj's integrated ethanol-to-jet demo plant received positive recognition, and the company is executing basic engineering orders for US customers, with completion expected by fiscal end and investment decisions anticipated in Q1 FY27.

The Praj GenX business achieved a breakthrough by securing its first order for CCUS skids from a global oil major, stemming from a framework agreement that holds potential for more work. This segment, along with new orders in Brewery (a Greenfield project over ₹100 crores) and ZLD (an integrated plant order over ₹100 crores), is expected to contribute to profitability in FY27. The company is targeting an order booking of 'not less than ₹500 crores' from the Mangalore facility for FY27, which is also on track to achieve break-even in FY27.

Favorable external developments include new trade agreements with the USA and EU, reducing tariffs on Indian capital goods, which will enhance Praj's competitive advantage in these geographies. The Union Budget 2026 also allocated ₹20,000 crores for Carbon Capture, Utilization, and Storage (CCUS) over five years, creating opportunities for Praj's CO2 capture solutions. Furthermore, the NITI Aayog report emphasizes the expanding role of biofuels (ethanol, CBG, SAF) in India's net-zero journey, providing a positive outlook for Praj's businesses.

Management attributed the Q3 margin impact to a shift in export mix towards lower-margin African projects involving construction activities. They anticipate quarter-on-quarter margin improvement, driven by better fixed cost absorption from the Mangalore facility, a favorable sales mix from new segments, and increased volume. Cash in hand stood at ₹590 crores as of December 31, 2025, reflecting an improvement from previous quarters due to enhanced receivables recovery and inventory liquidation.