Praj Industries: Target Price Set at Rs 389 by Prabhudas Lilladher
Praj Industries Receives Revised FY27E/FY28E EPS Estimates from Prabhudas Lilladher
Praj Industries, a leading player in the bioenergy sector, has received revised estimates for its FY27E and FY28E earnings per share (EPS) from Prabhudas Lilladher. According to the research report, the estimates have been revised downward by 5.4% and 0.7% respectively, due to slower-than-expected recovery in ethanol project ordering, delayed execution across key projects, and continued losses in the GenX business.
The company reported a subdued performance in the fourth quarter of FY26, with revenue declining by approximately 2% year-over-year (YoY) and EBITDA margin contracting by 600 basis points. The domestic 1G ethanol business continues to face a slowdown, with capacity additions largely paused following the achievement of current blending targets. Funding constraints and elongated execution cycles have also impacted project progress.
The margin performance was further affected by continued investments in the GenX business, which is yet to achieve meaningful scale despite ongoing customer qualification efforts. Management highlighted that raw-material price volatility, supply-chain disruptions, and geopolitical uncertainties led to the deferment of approximately Rs3 billion worth of enquiries during the quarter, impacting order conversion.
Despite policy developments around higher ethanol blending, sustainable aviation fuel (SAF), and compressed biogas (CBG) remaining encouraging, visibility on meaningful order inflows and execution recovery remains contingent on timely policy implementation and customer capex decisions. However, management expects gradual improvement in FY27, supported by brownfield opportunities, lifecycle services growth, data-centre-related GenX opportunities, and potential revival in the bioenergy investment cycle.
Stock Outlook
The stock of Praj Industries is currently trading at a price-to-earnings (P/E) ratio of 33.5x/23.6x for FY27/FY28E. Prabhudas Lilladher has rolled forward to Mar'28E and maintained its 'Accumulate' rating, valuing the stock at a P/E of 26x Mar'28E. This results in a revised target price of Rs389, down from Rs340 previously.
| Estimates | FY27E | FY28E |
|---|---|---|
| Revised EPS | -5.4% | -0.7% |
| Current P/E | 33.5x | 23.6x |
| Revised P/E (Mar'28E) | - | 26x |
| Revised Target Price | - | Rs389 |
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Investor Takeaway
Investors should be cautious about Praj Industries' performance due to slower-than-expected recovery in ethanol project ordering and delayed execution across key projects.
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