Praj Industries Limited — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

Praj Industries reported a challenging Q3 FY26 with PAT turning negative due to a significant exceptional item of ₹3,344 million from new labor codes and a 1% margin impact from reduced export revenue. Despite this, the company secured a breakthrough CCUS order, healthy order intake of ₹914 crores, and new projects in brewery and ZLD segments. Management highlighted positive external developments for biofuels and new growth avenues in data centers and biopharma, while acknowledging a subdued outlook for 1G ethanol Greenfield projects.

Highlights

  • Consolidated income from operations stood at ₹841 crores in Q3 FY26, stable QoQ.

  • Order intake for Q3 FY26 was ₹914 crores, with 68% from the domestic market, indicating strong domestic demand.

  • Secured a first breakthrough order for CCUS skids from a global oil major, signaling progress in new segments.

  • Commissioned two CBG plants utilizing Napier grass and rice straw, diversifying feedstock capabilities and commencing production.

  • Healthy order booking observed in the Services Business for performance enhancers and biogenic CO2 capture solutions, leveraging the existing customer base.

Concerns

  • PAT turned negative at ₹-12.4 crores in Q3 FY26, down from ₹19.3 crores in Q2 FY26.

  • Overall margins impacted by almost 1% in Q3 FY26 due to a reduction in export revenue and mix shift.

  • PBT before exceptional items for 9M FY26 significantly lower at ₹60.8 crores compared to ₹210 crores in 9M FY25.

  • Slowdown in 1G domestic Greenfield projects due to supply and demand imbalance and funding challenges.

Key financials

2 periods

Headline

  • Consolidated Income from Operations
    ₹841 Cr
    QoQ -0.12%
  • PBT before Exceptional Items
    ₹21.6 Cr
    QoQ -27%
  • PAT
    ₹-12.4 Cr
    QoQ -164.3%

9M

  • FY26 Income from Operations
    ₹2,323 Cr
    YoY -2%
  • FY26 PBT before Exceptional Items
    ₹60.8 Cr
    YoY -71%
  • FY26 PAT
    ₹12.24 Cr
    YoY -93.2%

What they filed

Q1 FY27: revenue up 11.9%, net profit up 140.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue816 853 860 640 842 +3%841 −1%845 −2%716 +12%
EBITDA86 73 75 31 56 −35%41 −44%23 −69%30 −3%
Net profit54 41 40 5 19 −65%-12 −129%12 −70%12 +140%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Q3 FY26 Revenue Mix
    34% Export Revenue71% Bio-energy Revenue19% Engineering Revenue11% PHS Business Revenue
  • Q3 FY26 Order Intake Mix
    68% Domestic Order Intake45% Bio-energy Order Intake42% Engineering Order Intake13% PHS Business Order Intake

Order book

high confidence

Total value

₹4,491 Cr

as of 2025-12-31 quantified

Inflow this quarter

₹914 Cr

Execution

Execution period for brewery and ZLD projects is typically 12-14 months; 50-60% of CCUS order to convert in FY27.

Composition

Mix 3 segments
  • Bio-energy (Inflow) 45%
  • Engineering (Inflow) 42%
  • PHS Business (Inflow) 13%

Share of order book by segment

The company is seeing a slowdown in 1G domestic Greenfield projects but strong traction in Brownfield solutions, with new orders in engineering and PHS segments compensating for the bio-energy slowdown.

Source: Prepared remarks

Capital allocation

high confidence
  • M&A Indian Oil Corporation (IOC) Joint venture · Pending regulatory

    For SAF project and overall bio-fuel scenario, but decision on specific bio-fuel project not yet reached.

    IOC JV, if you recall, was mean for starting with the SAF project and it was mean for overall bio-fuel scenario. So, as the decision has not yet been reached to which bio-fuel project has to be taken first, the decision is not yet reached to finality on the IOCL JV and that is the reason why we have not made any specific announcement on the IOCL JV.
  • M&A BPCL Joint venture · Pending regulatory

    For CBG projects, with the idea to start the JV when at least five projects are finalized. Currently short-listing projects and discussions are ongoing.

    If you look at BPCL JV, BPCL JV is meant for mainly to start with on the CBG side. And idea was to start this JV only when we are finalizing at least five projects to be taken up under this JV. So right now we are actually short-listing the projects for this JV, where the developer is also supposedly to be part of it. So, the discussions and negotiations are going on.
  • Liquidity Cash ₹590 Cr Cash in hand as of 31st December 2025 was ₹590 crores, showing improvement QoQ due to better receivables recovery and inventory liquidation.
    Cash in hand on 31st December '25 is Rs.5.9 billion. ... But, because the execution focus which we brought in, in Quarter 2 and Quarter 3, the receivables has also started improving and inventory also started getting diluted.

Guidance & targets

Order Inflow

  • GenX Order Booking from Mangalore facility Order Inflow · FY27 · High confidence not less than ₹500 crores
    our target is at least we should be hitting a number on order booking of not less than Rs.500 crores. That is the target which we have kept for ourselves from the order booking side, and the idea is also to capture as much of possibilities or the opportunities which are there in the first two quarters of the next year maximum. So, that is the picture which we are right now having from Mangalore facility point of view.

    — Sachin Raole

Profitability

  • Mangalore facility break-even Profitability · FY27 · High confidence break-even
    And just to add regarding the breakeven, what we mentioned earlier, I think we are on the course. We are still seeing that we will be able to do that in the FY27.

    — Sachin Raole

Revenue

  • CCUS skids order conversion to revenue Revenue · FY27 · High confidence 50-60%
    We expect that about 50% to 60% of this order will get converted into revenue in FY27.

    — Ashish Gaikwad

  • Brewery and ZLD projects conversion to revenue Revenue · FY27 · High confidence conversion
    And typically, our execution period is in the range of about 12-to-14 months. So, we do see the conversion of these orders in FY27.

    — Ashish Gaikwad

  • Company Revenue Revenue · 2030 · Medium confidence ₹10,000 crores
    And we believe that that ambition that we as a company have to reach Rs.10,000 crores and the vision that is set by our chairman, we are working on that step.

    — Ashish Gaikwad

Project Completion

  • Basic engineering orders for ethanol-to-SAF plants (US customers) Project Completion · by end of this fiscal · High confidence complete
    Currently, we are executing basic engineering orders of ethanol-to-SAF plants for our customers in the USA and we are planning to complete this work by end of this fiscal.

    — Ashish Gaikwad

What to watch in Q4 FY26

GenX order inflow from other customers

next quarter
Current First breakthrough order secured
Target New orders from other customers, especially from the US, contributing towards ₹500 crores FY27 target

Why it matters

Verifying if the initial GenX order is a one-off or if the pipeline is converting into broader order wins, crucial for the segment's growth.

I will not be able to tell you exactly what is going to happen in next quarter, but we will have to wait for one more quarter to see how the other customers are going to start placing order on GenX.

Risks & concerns

  • Slowdown in 1G domestic Greenfield projects

    medium

    Due to supply and demand imbalance, and funding/other challenges extending project execution cycles.

    Management acknowledged

  • Margin pressure due to export mix shift

    medium

    Overall margins impacted by almost 1% in Q3 FY26 due to lower export realization and higher proportion of lower-margin African projects.

    Management acknowledged

  • Skepticism on technology commercialization

    medium

    Analyst raised concerns that Praj's technology leadership announcements have not consistently translated into commercial orders.

    Analyst acknowledged

Q&A highlights

7 direct
Margin pressure explanation and outlook Direct
Q3 exports had larger component from African market (supply + construction activity), which has lower margins than typical international supply-only orders. This caused the margin drop compared to Q2. ... We will see quarter-on-quarter improvement definitely going forward. But it will take maybe one more quarter.

Clarifies the specific reasons for QoQ margin decline and provides a short-term outlook for improvement.

Asked by Sani Vishe

YoY cash position weakening Direct
Kandla orders were of a very high value and the delivery cycle was almost 18-months for them. Even though we were having some milestone payments happening in between, but the larger component was linked to the dispatches of the last set of equipment which has just started happening now. And that is how the cash flow position has got improved over the last three quarters.

Explains the reason for the YoY decline in cash position, linking it to the execution cycle of large, long-term projects.

Asked by Aditya Mongia

Progress and order inflow for GenX business Direct
our target is at least we should be hitting a number on order booking of not less than Rs.500 crores. That is the target which we have kept for ourselves from the order booking side, and the idea is also to capture as much of possibilities or the opportunities which are there in the first two quarters of the next year maximum.

Provides a specific order booking target for the GenX segment for FY27, indicating management's expectations for this new growth area.

Asked by Amit Anwani

Mangalore facility break-even timeline Direct
And just to add regarding the breakeven, what we mentioned earlier, I think we are on the course. We are still seeing that we will be able to do that in the FY27.

Reaffirms the company's commitment and confidence in achieving break-even for the Mangalore facility by FY27.

Asked by Shailesh Kanani

Lack of progress on IOC and BPCL Joint Ventures Partial
IOC JV... decision has not yet been reached to which bio-fuel project has to be taken first... BPCL JV is meant for mainly to start with on the CBG side... right now we are actually short-listing the projects for this JV... So, the discussions and negotiations are going on.

Challenges management on the slow progress of previously announced JVs, highlighting investor concern about execution and follow-through on strategic partnerships.

Asked by Dhaval Shah

Skepticism on technology leadership translating to orders Direct
Fair point, Sandip. So we cannot comment on the decisions taken by some of the other industry players. For Balrampur Chini, when that project got announced, maybe we had not completed our technology offering. But now we have, and we can certainly be ready for any new opportunity that comes up in the market.

Addresses a critical investor concern regarding the company's ability to convert its technological advancements into commercial orders, acknowledging past instances while asserting current readiness.

Asked by Sandip Sabharwal

Returning to FY24 margin levels (10-11%) Direct
majorly the margins are getting impacted because of the fixed cost absorption which is supposedly to happen in our new facility... Going forward, we will see that happening which will help us in improving the margin. That is one element. Secondly, naturally the mix of sales which you are talking about... the volume.

Outlines the key drivers management expects to restore margins to previous levels, providing a roadmap for profitability improvement.

Asked by Amit Agicha

Impact of NITI Aayog report on EBP targets Direct
Frankly speaking, it is not giving us some kind of a negative picture rather it is talking about expanding the entire basket and it is not only restricting to EBP per se. It is talking about something more than that. I think that is far more encouraging instead of only changing our hopes and everything to only ethanol blending.

Clarifies that the broader focus of the NITI Aayog report on biofuels (CBG, flexi-fuel, SAF) is seen as an expansion of opportunities rather than a dilution of ethanol blending targets.

Asked by Aditya Mongia

3 min read 7 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

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 items 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.

Order Book and Inflow Dynamics

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.

Strategic Shift in Bio-energy Focus

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.

Emerging Opportunities in CBG and SAF

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.

Breakthrough in Praj GenX and New Segments

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.

External Environment and Policy Support

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.

Margin Outlook and Cash Position

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.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls