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08 Fall
measuring growth | PRAJ Industries September 29, 2014
Praj Kaizen thesis Praj Industries is a story of multi-year compounding of revenue and earnings growth driven by new product developments, entry into new markets, and technology. Praj industries has three growth engines developed internally, which are unlikely to be impacted by the changing market environment. It has weathered business cycles and has come out bigger, sustainable, and diversified by creating new markets and business segments consistently. These growth drivers are providing medium-term to long-term visibility. Praj is entering a virtuous cycle in terms of growth and cash flow.
1. Core business of ethanol and brewery technology has seen multiple cycles and it
has emerged stronger and better. The business has become a cash cow now. 2. With the expertise of brewery technology, the company has developed newer
capabilities and technologies like waste water treatment, critical process equipment, and HiPurity Systems as part of its emerging businesses. These will see 32% CAGR over the next three years and contribute 47% of its consolidated revenue by FY17. It is investing cash from emerging businesses to develop new verticals such as livestock health and nutrition products, which will provide long-term growth and a new growth cycle.
3. Praj is developing technology to commercialize bio fuels from non-food materials
like- cellulosic material. It is setting up commercial demo plant over next 10-12 months and its success will take the company into a new growth orbit and provide nonlinear growth
All the above drivers are internal and will lead to continuous improvement in its revenue trajectory. In totality, adding the three revenue drivers, Praj will deliver revenue and earnings growth of 15% and 23% respectively over FY14-17
Vikram Suryavanshi | [email protected] | + 9122 6667 9951
September 29, 2014
Phillip Kaizen
We at PhillipCapital are presenting stocks with sustainable growth prospects generated by internal drivers.
改 善 Kaizen in Japanese stands for “continuous improvement” or “philosophy of improvement” derived from the words Kai, which means “change”, and Zen which means good. It involves all employees from the CEO to the assembly line workers. Kaizen was first implemented in several Japanese businesses after the Second World War, influenced in part by American business and quality management teachers who visited the country. It has since spread throughout the world and is now being implemented in environments outside of business and productivity.
measuring growth | PRAJ Industries September 29, 2014
measuring growth | PRAJ Industries September 29, 2014
Praj Industries Limited a perfect blend
• Praj is knowledge based company and has experience and developed
expertise in bio-processes, engineering and project development. It has set up modern research and development centre “Praj Matrix” as backbone of
technology development. • The company is market leader in bio-fuel technology with 65% market share
in domestic ethanol market along with strong presence in international market. It had export 52% revenue from export in FY14.
• Praj has diversified within its core competency into emerging businesses like industrial water treatment, critical process equipment’s and bio products.
Emerging business is providing sustainable strong growth in medium to long term with focused growth strategy for each segment.
• The revenue contribution from emerging business grew from 18% in FY13 to ~28% in FY14 and would increase to ~47% by FY17.
• Praj has consolidated market in domestic brewery market and is now focusing on growth opportunities in international brewery market.
• Praj is working on second generation bolt on demo plant with investment of ~INR750m and is expected to complete over next 10-12 month. It will use
non- food based feed stock like Bagasse, Cane trash, corn cob etc. Valuations At CMP of INR61, stock is trading at 13.5xFY16 earnings and P/BV of 1.8XFY16.
The company has strong balance sheet with zero debt and enjoys leadership position in ethanol and brewery market. Praj aspires to be a major player in the
environment, energy and agri process led applications providing integrated solutions including plant, equipment and products. The commercial success of
second generation of bio-ethanol plant would be game changer for the company. We have valued at 14xFY17e with target price of Rs 93 per share.
Key Data
CMP (Rs) : 61
Target (Rs) : 93 (52%)
RECO : BUY
Bloomberg : PRJ IN
Market Cap (Rs bn) : 11
Market Cap (USD bn) : 0.2
Stock Performance
O/S Shares (Mn) : 177
52 - Wk Hi/Lo (Rs) : 79/ 36
Liquidity 3m (USD mn) : 1.2
Shareholding Pattern (%)
Promoters : 33.0
FII / NRI : 8.7
FI / MF : 15.4
Non Promoter Corp. Holdings : 14.8
Public & Others : 28.1
Price Performance (%)
1mth 3mth 1yr
Absolute -2.5 -14.8 67.7
Rel to BSE -2.6 -19.4 34.4
Valuation Summary Rs mn FY13 FY14 FY15E FY16E FY17E Net Sales 9,191 9,858 10,384 12,341 14,906 EBIDTA 904 867 844 1,213 1,765 Net Profit 706 629 578 800 1,179 EPS, Rs 4.0 3.5 3.3 4.5 6.6 PER, x 15.3 17.2 18.7 13.5 9.2 EV/EBIDTA, x 11.3 12.1 12.3 8.5 5.7 P/BV, x 1.9 1.9 1.8 1.8 1.8 ROE, % 12.4 10.8 9.8 13.4 19.6 Debt/Equity, % 2.4 3.7 3.6 3.6 3.5
Source: Company, PhillipCapital India Research Estimates
measuring growth | PRAJ Industries September 29, 2014
Emerging businesses to provide secular growth Praj has re-aligned its business model and business mix over the past five years to create
sustainable businesses. It has developed an additional revenue stream through
“emerging businesses” started in 2009, which contributed 28% of its revenue in FY14.
Emerging businesses is an extension of Praj’s core competencies in biotech, engineering,
manufacturing, and process and project integration.
Its emerging business unit consists of 1) water and waste-water treatment, 2) Praj HiPurity
Systems (earlier Neela systems), and 3) Critical Process Equipment and Systems (CPES).
We estimate the contribution from these businesses to touch ~47% in FY17e and this
increased contribution should reduce Praj’s business cyclicality risk. The emerging
businesses segment has a diversified customer base in sectors such as oil and gas, sugar,
textile, beverages, pharmacy, cosmetic, agro chemical, high-end industrial products, and
biotech.
1) Praj HiPurity Systems
Praj renamed its 70% subsidiary Neela Systems Limited as Praj HiPurity Systems
Limited. It offers equipment and standalone systems for treating wastewater sources
from various focused segments. The offerings are customized to the clients’
requirements for treating streams from chemical, hotel, dairy, hospital, and food and
beverage industries.It has put in place a strategy to: 1) increase wallet share by
offering integrated solutions that will cover end-to-end process plant, 2) increase
international business by focusing on key geographies and accounts, and 3) build a
strong services business.
2) Critical Process Equipment & Systems (CPES) Praj started this division to explore its fabrication, design and engineering skills. It
has almost all the required approvals for business and now is pre-qualified to work
with global players.
CPES has now significantly moved ahead on the value chain from the first stream of
‘built to print’ to ‘design to build’ and ‘skids & systems’. The company has now
started designing and manufacturing products for oil and gas and other industries
which involve high-skill engineering and fabrication with better value addition. The
CPES business has clients from the oil and gas industry, global EPC companies, and
pharmaceutical manufacturers.
3) Water and wastewater systems
Praj offers an entire range of technologies for industrial waste water treatment. With
environmental norms becoming more stringent and increasing shortage of fresh
water, more companies are reducing water usage by re-cycling and re-using. Praj has
successfully demonstrated the technology for treating waste water and recycle
odorless, colorless and pathogen free for alternate use in textile hub Tiruppur, Tamil
Nadu and other parts of India. The “Clean Ganga” river project that was recently
announced by government could provide opportunities for the company. The project
will rejuvenate 2,500km long Ganga with 118 towns having waste water treatment,
sewerage infrastructure at estimated cost of Rs 510bn.
4) Livestock Health and Nutrition product It is new initiative for company with extension of emerging business. Praj is
developing biotech products involving application of modern biotechnology for the
industrial production of chemical substances and bio-energy, with less waste and
reduced energy consumption. It has experience and expertise in microbiology in its
existing businesses of distillery and brewery co-products and using Praj Matrix - the
R&D centre for development of biotech products. The company has set up good
manufacturing practices (GMP) compliant manufacturing facility at Jejuri, near Pune
and has launched products in the poultry and aqua segment as food additives. It has
clear roadmap over next five year to develop this business to significant size.
measuring growth | PRAJ Industries September 29, 2014
First generation ethanol – story not over yet! Domestic market to provide opportunities Praj successfully capitalized on growth opportunities provided over FY04 –FY09 by the
first phase of ethanol blending with petrol with the government’s 5% blending mandate.
It demonstrated its strength by capturing around 75% of India’s market and reported
revenue CAGR of 53% during the growth phase of FY04-09. Within the same time frame,
it also expanded in international markets with around 30% market share in the regions
that it is present in, i.e USA, Africa, South East Asia. The ethanol blending and demand
for ethanol plant slowed down post 2009 because of cyclical nature of sugar industry
leading to volatility in ethanol supply.
The success story of ethanol blending in Brazil can be replicated in India. The production of
bio-ethanol from sugarcane is most efficient and economical and both countries are among
the larger producers of sugarcane worldwide. Brazil started ethanol blending in 1980 and
over a period of time, was able to demonstrate successful ethanol blending on a
commercial basis. Flex-fuel cars that can use either ethanol or blended gasoline account for
about 57% of Brazil’s total car fleet and 92% of new vehicles sold in Brazil are flex-fuel cars.
In the US, ethanol blending is done to the extent of 10% while in Brazil the corresponding
figure is 25%. Considering the fact that India is the world’s second largest sugarcane
producer, its blending record of just about 2% is below par.
The government of India made 5% blending of ethanol mandatory with a view to take it
to 10%. India consumes ~22 bn litres of Petrol (Gasoline) annually and ethanol blending
of up to 5% can potentially replace more than one billion litres of imported oil (forex
savings of ~USD800m). We believe the next level of growth will continue from increased
acceptance on a commercial basis.
The government’s decision in 2013 to allow sugar companies to participate in tenders
based on competitive bidding vs. the earlier method of fixed pricing for ethanol blending
has enhanced the viability of ethanol manufacturing. Enabling policy changes and
development of infrastructure over a period of time should once again kick start growth
in ethanol blending.
India monthly gasoline consumption (000’tons)
Source: Ministry of Petroleum and natural Gas
Ethanol price in India (Rs per ltr), blending becoming an attractive option
Source: Annual reports of Balrampur Chin, industry, PhillipCapital India Research
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measuring growth | PRAJ Industries September 29, 2014
Export opportunity: Emerging markets are focusing on ethanol blending The world ethanol production is 23.42bn gallons with around 90% of total output from
three regions - USA (56%), Brazil (27%), EU (6%). The first generation ethanol market is
well developed in the USA and Brazil and has now started picking up in the rest of world.
Considering the benefit of ethanol blending on a commercial basis as well as a renewable
fuel, 62 countries now have active ethanol blending programmes, providing export
opportunities for Praj. It is focusing on the emerging economies of Latin America and
South East Asia and upcoming ones such as Africa.
The European Union is the third-largest market for ethanol in the world with a production
of 1.37bn gallons. Through its Renewable Energy Directive (RED), it has laid down the
path for renewable energy feedstock and is encouraging blending of biofuels up to 10%
by 2020 from the current 5%. South East Asia and Africa are emerging as growing
markets for ethanol blending (along with EU countries) and are planning to increase their
blending percentage. Africa has an advantage of preferential treatment with the EU and
also of lower cost this is expected to lead to pick up in ethanol trade from Africa to EU.
Number of countries following ethanol-blending programme
Source: PhillipCapital India Research, Industry
Services to generate recurring revenue from existing customers Praj is targeting 15-20% revenue from providing services to its existing customer base of
around 300 ethanol manufacturers. It has set up a separate team for creating service
opportunities with existing ethanol plant in domestic and international market. Some of
the plants provided by Praj are now ~20-25 years old and provide opportunities in
energy saving and yield improvement. The company is also looking at annual
maintenance contracts for existing plants and also retro-fitting existing capacities for
expansion.
Brewery business to see incremental growth from international markets Praj is a technology and engineering solutions provider to the brewery industry and
enjoys a 65% market share in the domestic brewery market. It provides brewery plants on
a turnkey basis, which includes engineering, supply of process equipment, support for
commissioning, and project management. The company also adds value by integrating
new equipment with existing systems. Praj has 25 years of experience and has worked
with most domestic and international players such as United Breweries, SABMiller, Crown
Brewery (Anheuser Busch – InBev), and Heineken. It has undertaken R&D initiatives in this
field through its ‘Praj Brewery Laboratory’ set up in accordance with EBC standards. Praj
has a detailed understanding of different raw materials, by-products formation, and
reaction kinetics, which help it design plants to specific standards. India’s beer market
saw an average 11% volume CAGR over the past 5 years. Praj has started becoming an
international brewery supplier and has received orders from two of the top-five global
brewers — it received an order from SABMiller for completing brewery plant in Namibia
(worth Rs 540mn) and an order from Heineken for its Myanmar plant. Praj has got a good
foothold in two of the growth markets for breweries — South East Asia and Africa. With
more than 100 successful brewery plant completions and experience of working with top
players, the company is planning to replicate its success in breweries in the international
market.
44%
21%
19%
16%
EU region
Americas
Asia Pacific
Africa
measuring growth | PRAJ Industries September 29, 2014
Second-generation ethanol Praj is developing a technology for commercially using cellulose (basically fibre, non-food) material to produce ethanol under its Praj Advanced Cellulose
Ethanol program (PACE). It has a laboratory plant at its Praj Matrix Research centre (common innovation centre for all business units), Pune for testing second
generation ethanol process. The company is setting up a commercial demo plant to produce ethanol from
multiple feedstock including corn cobs, corn stover (leaves and stalks of maize left in a field after harvest), and bagasse (fibrous matter that remains after
sugarcane or sorghum stalks are crushed to extract their juice) — all non-food material. The commercial plant is a ‘bolt-on’ model i.e using existing ethanol
plant /parts of sugar mill to save on the cost and time by using common process equipment. The commercial success of second generation ethanol plants would
be a huge opportunity for the company as they can run on multiple feed stocks and give multiple outputs.
Scalability of business Praj is a technology and process-oriented company — this means that in a cycle upturn, it can quickly scale up its operations. In the FY05-09 business cycle in
ethanol, its revenue grew four times to Rs 9.5bn while profits grew by almost three times to Rs 1.3bn with a RoCE of `34%. The demand recovery in ethanol
and brewery in emerging markets would significantly improve its return ratios going ahead. Its new businesses (critical process equipment and high-purity
systems) are also asset light. The company is focusing on its industrial water and waste water business which are usually working capital heavy. However, Praj is
taking water technology through the EPC route and is focusing on an asset light model.
Return ratios over different cycles, expect to recover
Source: Company, PhillipCapital India Research
Financials We expect revenue CAGR of 15% to Rs 14.9bn over FY14-17 driven by 36% CAGR in emerging businesses. Revenue from its ethanol segment should see a marginal CAGR of 2% over FY14-17 to touch Rs 6.95bn in FY17. We expect a 10% decline in the ethanol segments revenue to Rs 5.85bn in FY15, considering 28% decline in 1QFY15 order book to Rs 7.3bn (BTB at 1.25x TTM revenue). Ethanol business has delivery cycles of 12-14 months which is higher compared with 3-4 months in HiPurity Systems and 5-9 months for process equipment and water business. We have assumed order intake of Rs 6bn in FY15 and Rs 6.6bn in FY16 for its ethanol segment. We estimate the brewery segment to report revenue CAGR of 18% over FY14-17e to Rs 976mn. The revenue contribution from emerging businesses should increase from 28% in FY14 to 47% in FY17. Operating margin has declined from a peak 22% in FY08 to 8.8% in FY14 with slowdown in ethanol and brewery segments and also due to the initial setup expenses for emerging businesses. However, Praj has achieved critical mass in emerging businesses over the past four years and has got approved licenses for critical process equipment – this should help to scale up operations and improve margins.
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measuring growth | PRAJ Industries September 29, 2014
Segmental revenue growth trend
Source: Company, PhillipCapital India Research
EBITDA margins to bottom out at 8.1% in FY15
Source: Company, PhillipCapital India Research
Earnings CAGR of 25% over FY14-17
Source: Company, PhillipCapital India Research
Margins in high-purity are significantly higher at 22-25% and they are likely to remain at
these levels in the future. The margins in ethanol and brewery are expected to remain at
around 10% while margins in critical process and industrial water should recover
significantly when these businesses scale up. Overall we expect profits to increase at
CAGR of 23% from Rs 629mn in FY14 to Rs 1.17bn.
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measuring growth | PRAJ Industries September 29, 2014
Valuations Praj with technology base and fabrication skills offers significant scalability. Attractive return ratios, strong balance sheet, and a scalable model have helped
the company to get premium valuations in past. In the last 5 years, Praj has traded at a P/E of 12-20x and average EV/ EBIDTA of around 11x. The company
has created emerging businesses to capitalize on its engineering strength, which will provide growth in the medium term. The investment in second-generation
ethanol and next-horizon bio-products will provide sustainable growth opportunities over the medium to long term. The management has created
multiple growth drivers to reduce cyclicality of revenue and focus on export opportunities — this will drive earnings growth and valuations.
At the current price of Rs 61, the stock trades at 9.2x our FY17 expected
earnings and 5.7x EV/EBIDTA. We have valued the company at 14x our FY17 EPS of Rs 6.6 to arrive at a price target of Rs 93. We are initiating coverage with
a BUY rating.
1-year forward P/E chart
Source: Company, PhillipCapital India Research
1-year forward EV/EBITDA chart
Source: Company, PhillipCapital India Research
measuring growth | PRAJ Industries September 29, 2014
Business Risks Food verses fuel issue Currently the raw materials used for commercial production of ethanol are corn,
sugar cane, and beet. The increasing demand for these crops is pushing up their prices and this may lead to crop diversification (farmers will shift to these cash-
rich crops resulting in lower production of other food grains and raising the concern over availability of food). While this issue is not significant at present,
the commercial viability of non-food raw material is necessary to increase biofuels production significantly.
Saturation in the US for 1st generation ethanol The US is a major market for ethanol and Praj has a significant exposure in this market. Current ethanol manufacturing capacity in the US is around 15bn gallons
per annum vs. production of around 14bn gallons per annum. The ethanol is manufactured from corn and 40% of total corn production is used to produce
ethanol. The US government has limited ethanol from corn to current levels due to food-inflation concerns and the food versus fuel issue. Additional growth will
come from second-generation fuel ethanol, which we believe would take time to be viable on a commercial basis.
Resistance from oil marketing companies Ethanol blending is done before the oil is pumped out in petrol pumps and the network is controlled by oil marketing companies. Insufficient infrastructure is
adding to the cost of biofuels blending, leading to resistance by oil marketing companies. The policy support and tax benefits could lead to commercial
viability for ethanol blending in India.
Success of cellulose technology We believe the successful commercialization of the biofuels from cellulose (non-food items) will lead to a quantum leap in biofuels growth. The demand for
biofuels may be fulfilled without raising many concerns about food. Praj is spending on R&D and commercial plant for Cellulose technology. However
delay in commercialization or early adoption of technology by competitors can hamper Praj’s growth. The raw material availability at a large scale and on
consistent basis is not tested and could impact the commercial development of cellulose technology.
measuring growth | PRAJ Industries September 29, 2014
Company Background Praj started its operations in 1984 with the objective of providing technologies in fermentation, distillation, and waste-water treatment to the Indian distillery
industry. The company established a research and development centre in 1991 and patented its technologies and processes for ethanol manufacturing. It
diversified into brewery engineering, plant and equipment in 1993. After
capitalizing on the growth in ethanol and breweries, the company diversified into related activates, which it has classified under emerging businesses.
Its businesses are now structured into two broad categories - 1) Core, which is
ethanol and breweries and 2) Emerging, which is water, critical process equipment, and high purity system
Ethanol & Brewery
Ethanol-‐ 1st and 2nd Generation, Brewery
ethanol (beverage, fuel, industrial, pharmaand perfumery) and brewery plants
encompassing range of technologies and
systems for water & wastewater management
Water and Waste Water
Water and Waste Water treatmnt plants
for Industires
industrial applications for high quality water, complex effluent
treatment including recycle, reuse and zero liquid discharge
plants.
Critiacl Process Equipmet
for high end equipment & system mainly for oil & gas, petrochemical,
fertilizer, chemicals industry
demonstrated capabilities wherein it
supplies critical process equipment & systems to a number of domestic and global
players
High Purity Systems
providing hi purity water and hygienic
systems
providing end-‐to-‐end solutions for the pharma, biotech, food & beverage
sector.
Bio Products
livestock feed health & nutrition business
also working with biochemicals and human health & nutrition products
which are presently in different stages of development
Core Business Emerging Business
measuring growth | PRAJ Industries September 29, 2014
Ethanol and brewery Praj provides complete solutions for ethanol manufacturing plants from concept
to commissioning, feedstock handling, and wastewater management. It controls around 75% of the domestic market and about 30% of the international biofuels
technology market in the regions that it operates in. It has transformed into a global company with around 600 clients in more than 60 countries across 5
continents. Praj provides fermentation systems, including technology packages for multiple
feedstocks such as cane-molasses, cane juice and filtrate, starch-based raw materials such as corn, sorghum, wheat, tapioca, and tropical sugar beet. It
provides one of the lowest costs of production by having higher alcohol yield, higher energy and water efficiency, and by providing effective water
management including recycle and reuse and zero liquid discharge.
Praj scalable and diversified business model
Source: Company, PhillipCapital India Research
It has a manufacturing and research and development facility at Pune, Maharashtra, and two manufacturing units in Kandla, Gujarat. The facilities are
accredited with ISO 9001-2000 and ASME 'U' & 'H' stamp for pressure vessels and heating boilers. It has core expertise in bio-processing and comprehensive
understanding of feedstock diversity and use. Praj benefits from its thirty years of expertise in scaling up biochemical plants, global experience of process
integration and execution and expertise of process optimization.
Second-generation Biofuels It has accelerated the process of adopting non-food raw material such as sweet sorghum to ethanol and extracting biodiesel from Jatropa. It integrates the
entire value chain for sweet sorghum and Jatropa, right from cultivation practices to wastewater treatment. It has developed the biodiesel technology in-
house, which is able to handle different agri-based raw material.
Praj is developing a technology for the commercial use of cellulose material to produce ethanol under Praj Advanced Cellulose Ethanol Program (PACE). It is
setting up a commercial demo plant in India to produce ethanol from multiple feedstock including corn cobs, corn stover, and bagasse. The commercial plant
will be a ‘bolt-on’ one which will make it easier for sugar companies to reduce cost and time (if they choose to install it) by using common process equipment. Development of Second generation bio-fuels
Source: Company, PhillipCapital India Research
measuring growth | PRAJ Industries September 29, 2014
Praj Matrix - R&D Centre Praj’s R&D division is designed to provide environmentally friendly solutions. Its R&D lab
at Pune called ‘Matrix’ engages in the development of bio-based technologies and has a
certificate from the department of scientific and industrial research (GoI). It has also
received the status of a private-sector biotech park from the Government of Maharashtra.
This R&D centre is built on five acres with a built up area of 85,000 sq. ft. at a capital
expenditure of around Rs 1.2bn.
Praj Matrix: Focus areas
Source: Company, PhillipCapital India Research
Praj Matrix has a 9,000 sq. ft. clean-room facility with six research laboratories for
conducting microbiology and molecular biology research. It has the infrastructure to
handle aerobic, micro aerobic, and strictly anaerobic microorganisms. R&D centre has
fully automated fomenters from a scale of 2 litres up to 100 litres for rapid process scale
up and validation.
The research centre has a ‘lignocelluloses (biomass)-to-bioethanol’ pilot plant with a
capacity of 1-1.5 tonnes per day of feedstock. It can use sugarcane bagasse, corn cob,
grasses, corn stover, rice straw, wheat straw, wood chips and other agricultural biomass
residues. This plant is capable of end-to-end trials including feedstock handling, pre-
treatment, enzymatic hydrolysis, and fermentation.
Focus areas for research and development Centre- Praj Matrix
Source: Company: PhillipCapital India Research
Bio FuelsEthanolAdvanced Jet fuelsDrop in Fuels
Bio ChemiclesPentose SugarsHexose SugarLigniinGlycerol
Bio ChemiclesPentose SugarsHexose SugarLigniinGlycerol
Advanced Strain DevelopmentPathway Engineering and Genetic Modification of micro-‐organisms for the production of Bio-‐Fuels and Bio Chemicals.
Molecular andMicro biology
Bio-‐Process Technology
Scale-‐up and process
engineeringAnalytical Sciences
Chemicals Sciences Biologists
Chemists Engineers
Engineeredmicrobes
NovelAnalytical Methods
Fermentation and
separation technologies
measuring growth | PRAJ Industries September 29, 2014
Emerging Business Critical Process Equipment and Systems Praj established a dedicated business unit in FY10 to offer “Critical Process
Equipment & Systems” (CPES) to various process industries such as oil & gas, refineries, petro-chemicals, chemicals, food, pharma and biotech. CPES
undertakes end-to-end projects for process skids and packages (for easy transport and installation).
Praj offerings in critical Process equipmets Static Equipment Process Systems Reactors / Fermenter Distillation System
Pressure Vessels Separation System
Separators / Scrubber/ KOD Evaporation System
Heat Exchangers (Shell & Tube) De-hydration System
Columns & Towers Solvent Recovery Plant
Process Skids Turnkey Process System / Plants
Source: PhillipCapital India Research
Manufacturing Capabilities __________ SEZ Kandla __________ Particulars Pune Unit Unit 1 Unit 2 Total are (sq mtr) 20,000 30,000 21000
Covered are (Sq mtr) 10,000 15,000 9750
Shell Rolling thickness 35 mm 35 mm 120 /150 mm
Shell Diameter 5 mm 6.5 mm 8.5 mm
Shell Lenght 20 mm 50mm 50 mm
Dished Thickness 30 mm 30mm 120 mm
Dished Diameter 5 m 6 m 6 m
Lifting Capacity 100 ton 200 ton 300 ton
Source: Company
Praj has developed a multi-disciplinary engineering team and a well-equipped
heavy fabrication shop to cater to the demand of the oil and gas, fertilisers, refineries, chemicals, petrochemicals, food, pharma, and biotech industries. Two
of its facilities are near the port in the Special Economic Zone (SEZ) of Kandla in Gujarat. Praj has a manufacturing capacity of 16,500 ton per year.
High-purity systems Praj HiPurity Systems Limited (formerly Neela Systems Limited), provides value-added solutions to the pharmaceuticals, biotechnology, cosmetics, food and
beverage industries. It offer integrated solutions which help to optimize the investments of the clients and is a leading organized solutions provider in India
with a wide range of solutions for the high-purity sector. Its major services include water treatment solutions and modular systems, wastewater treatment
solutions, and process engineering and design. It understands the specific requirements of customer industries, particularly from the regulatory perspective
and adding value.
Biotech products Its bio-products division is engaged in monetizing the work of its research
laboratory, Praj Matrix, by bringing the agro-based bioprocess technologies to the market. Biotech products seek to replace or reduce the use of fossil-based
products. It has developed livestock health and nutrition products, which are in commercial production and sale. These products help enhance milk production
while keeping the livestock healthy. Praj Matrix has a pipeline of these products and processes under development. For this purpose, Praj has set up a 65,000
sq. ft. Good Manufacturing Practice (GMP)-compliant production unit, which is currently producing performance enhancers for distilleries and livestock health
and nutrition products. The production unit, located near Pune, is designed to
measuring growth | PRAJ Industries September 29, 2014
world-class standards in hygiene. It complies with Kosher and Halaal certifications.
The division manufactures performance enhancement for poultry (layers and
broilers) as well as dairy animals. These are food additives used for animals weight gain, improved egg production, high milk productivity with high fat &
SNF content.
Bio product roadmap
Source: PhillipCapital India Research
Bio Products offerings by the company - 1) Poultry: Layers and broilers
2) Dairy: Cow, calves and pregnant cows 3) Fodder: Green fodder / silage application in milch cattle
Quarterly Financials Rs mn Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Total Revenue 1,731 1,942 2,691 3,494 2,213 YoY growth -13.6% -11.2% 13.6% 31.3% 27.9% Raw material cost 732 879 1,307 1,873 1,211 Raw material % of Sales 42.3% 45.3% 48.6% 53.6% 54.7% Employee Cost 263 331 321 325 313 Other expenditure 718 644 735 865 601 Total Cost 1,712 1,854 2,363 3,063 2,125 EBITDA 18 89 328 431 88 EBITDA margin (%) 1.1% 4.6% 12.2% 12.3% 4.0% Depreciation 54 56 67 60 93 EBIT -35 33 261 371 -5 Interest 3 2 5 5 6 EBT -38 31 256 365 -11 Other income 101 43 58 36 50 PBT 62 74 314 401 38 Tax 17 16 87 85 30 Tax rate (%) 26.8% 21.5% 27.7% 21.2% 78.1% PAT 46 58 227 316 8 Less: Minority interest 1 -2 7 13 13 Forex gain / (loss) -13 4 22 -95 29 Extraordinary item - - - - - Reported PAT 31 65 243 208 25 EPS-adjusted (Rs) 0.3 0.3 1.2 1.7 -0.0 EPS-Reported (Rs) 0.2 0.4 1.4 1.2 0.1 Order book 10,100 9,900 8,750 8,200 7,300 Source: Company
measuring growth | PRAJ Industries September 29, 2014
Annexure I: Biofuels Biofuels are made from renewable resources such as agricultural products. Specifically,
they are transportation fuels and include bioethanol and biodiesel. Bioethanol is blended
with petrol while biodiesel is blended with diesel. The technology for bioethanol is well
accepted while for biodiesel, it is still at a nascent stage. Conventionally, ethanol has
been produced from sugar-bearing feedstock such as cane, beet juice, and molasses, or
from starch-based feed stock such as wheat, corn, or even tubers such as cassava
(tapioca). The application of alcohol as transport fuel has created a need for newer
energy feedstock such as sweet sorghum. Biodiesel is made from non-edible oil seeds or
waste oil. These could be Jatropa, Karanji, or waste oil from restaurants, etc. The
biodiesel can be blended with ordinary diesel in any proportion or it can be used 100%
as a fuel.
Ethanol Ethanol (CH3CH2OH) is a liquid alcohol, a group of chemical compounds whose
molecules contain a hydroxyl group, -OH, bonded to a carbon atom. Ethanol is produced
from the fermentation of sugar-using enzymes and specific varieties of yeast. Glucose, the
preferred form of sugar for fermentation, is contained in both carbohydrates and
cellulose. Carbohydrates are easier than cellulose to convert to glucose. The organisms
and enzymes for carbohydrate conversion and glucose fermentation on a commercial
scale are readily available.
The ethanol molecule contains oxygen, which allows the engine to more completely
combust the fuel, resulting in fewer emissions. Since ethanol is produced from plants that
harness the power of the sun, ethanol is also considered a renewable fuel. Therefore,
ethanol has many advantages as an automotive fuel. Adding ethanol to gasoline
increases the octane number — a measure of the fuel's resistance to pre-ignition or
engine "knock." However, a 10% ethanol blend contains about 97% of the energy of
"pure" gasoline, which could increase fuel consumption by about 2-3%; the energy loss is
partly offset by the increased combustion efficiency of the engine. There is no engine
modification required for ethanol-blend petrol up to 20%.
Ethanol-manufacturing process The grains classified as starch is suitable for ethanol production (see table below). The
starch is hydrolysed into dextrin, which is converted into glucose and ethanol
simultaneously. After cleaning and milling raw material, slurry is prepared using recycled
steam generated during distillation and evaporation. This is followed by cooking, where
the slurry is cooked by steam injection in the presence of liquefying enzymes. In the
saccharification and fermentation, dextrin is converted into glucose by saccharifying
enzymes and ethanol is produced by employing yeast in fermenters. After taking ethanol,
the remaining material is further processed to get valuable by products such as distiller’s
grain, which is used as a feed ingredient for livestock. The manufacturing plant can be
configured to operate on multiple feed stocks with little modification.
Ethanol manufacturing Process chart
measuring growth | PRAJ Industries September 29, 2014
Ethanol growth analysis The world ethanol production has increased from 10.7bn gallons (40.7bn litres)
in 2004 to 23.4bn gallon (88bn litres) in 2013 (implied CAGR of 9%) because of ethanol blending in gasoline. The US accounted for 57% of the world’s ethanol
production in 2013, while Brazil was the second-largest producer with a 26% contribution. The growth was led by strong demand in the US for fuel blending.
US ethanol production increased from 3.5bn gallons in 2004 to 13.3bn in 2013 — a CAGR of 16%.
Ethanol global production
Source: PhillipCapital India Research, www.ethanolrfa.org.
We have divided ethanol growth drivers into three stages — mandatory
requirement, commercial viability, and technology innovation. We believe the growth in the initial stage was driven by environment issues such as reducing
carbon dioxide emissions and other greenhouse gases. Ethanol has worldwide acceptance as an eco-friendly fuel and will be used to replace lead and MTEB in
gasoline as an octane booster and oxygenate. US mandated the use of oxygenated fuels with a minimum of 2.7% by volume and the countries which
are not very high gasoline consumers such as Peru and Colombia in South America have announced ethanol programmers.
Once the infrastructure for ethanol blending is in place, the ethanol blending programme is expected to move to the next stage — voluntary blending —
depending on economic viability — to reduce the dependence on fossil oils, as seen in Brazil. Success in commercial production of biofuels will come by
improving the efficiency level, where the cost of production will be lower than the present raw material use.
Ethanol three stage growth analysis
Source: PhillipCapital India Research
In stage 1, the demand for ethanol is generally driven by mandatory blending because of environmental issues. The demand for biofuels stems from the
energy crisis and environmental degradation. Use of fossil fuels releases carbon dioxide while burning and increases global warming. Ethanol-blended gasoline
and ethanol-blended diesel are considered viable alternatives to further lower emission levels. Ethanol as a techno-commercial viable oxygenate is mixed with
0
5
10
15
20
25
2007 2008 2009 2010 2011 2012 2013
Rest of world Canada China Europe Brazil USA
Stage -‐ I
Mandatory requirementEnvironmentalsubsidy benefit
Stage -‐ II
Commercial viabilityDue to high gasoline prices and improved yield
Stage -‐ III
Technology innovationCommercializsationof Cellulosie cellulose technology
Period
Ethanol Production
measuring growth | PRAJ Industries September 29, 2014
petrol to meet the oxygenate requirement under the current fuel specifications instead of methyl tertiary butyl ether and ethyl tertiary butyl ether, a known
groundwater contaminant Subsidy support: Along with environmental issues, countries are also looking at
ethanol blending to ease pressure on gasoline prices. To successfully implement blending and create sufficient infrastructure, most countries are giving incentives
in the initial stage. While some ethanol-producing states offer tax incentives for gasoline blended with ethanol and for ethanol production, which vary from US$
0.10 to US$ 0.40 per gallon. Canadian provinces promote ethanol use as a fuel by offering subsidies of up to 45 cents per gallon of ethanol. The US
administration has been supporting the farm sector by providing a subsidiary in the form of tax credit equivalent to US$ 0.12 per litre (Rs 5.52 per litre).
Stage 2: The mandatory blending requirement in the initial stage will act as a
floor and not a ceiling for ethanol, considering growing appetite for energy. The price of fossil fuel could increase substantially if we could not find a source of
cheap energy alternative. The floor price of ethanol is likely to be set by the variable cost of producing an incremental gallon of ethanol. The variable price
for ethanol mainly depends on the price of raw material –corn or sugar cane. As production capacity increases, ethanol prices will continue to trend downwards
until they are parallel to or correlate with raw material prices. To understand cost economics in medium term with existing technology and raw material, we
have studied economics for ethanol blending in India, Brazil and USA.
Stage 3: We believe the commercial viability of manufacturing ethanol from non food raw material would be significant driver in future. Emerging technology and
production process will overcome many of the present limitations on commercial and technological production of bio ethanol from cellulose. Substantial
reductions in ethanol production costs may be made possible by replacing existing raw materials with less expensive cellulose-based feed stocks. Cellulosic
feed stocks include agricultural wastes, grasses and woods, and other low-value biomass such as municipal waste. Although cellulosic materials are less
expensive than corn, they are more costly to convert to ethanol because of the extensive processing required. Cellulose enzymes used to convert cellulose to
sugar are currently too expensive for commercial use. The development of economically viable technologies that can break the cellulose into the sugars
that are distilled to produce ethanol can take the ethanol blending into next orbit.
Annexure II: Ethanol blending experience in India Beginning January 2003, the government mandated the use of 5% ethanol
blend in automotive fuels in India through its Ethanol Blending Programme (EBP). It started with bending mandate in nine states and four union territories
with ethanol demand of ~370mn litres with fixed price of Rs 14.5 per ltr. The decline in sugar production in 2003-2005 created a shortage and resulted in less
than 1% overall blending. During 2006-09 the ethanol blending extended to twenty states and eight union territories with annual demand moving to ~650mn
litres – and the price was fixed at Rs 21.5 per litres. During the 2009-12 the fixed price increased to Rs 27per litres and in November 2012, the
government announced a few recommendations to boost ethanol blending. In order to maintain competitiveness with other end-user industries, the
government allowed prices of ethanol used for blending to be market driven. As per the new mechanism, OMCs will float tenders annually and sugar companies
can quote the price at which they are willing to supply ethanol at the depot. Secondly, the government permitted non-uniform blending, by allowing
up to 10% ethanol blending in a particular state.
Currently, the overall blending rate in India is around 2% and if actual blending is increased to 5%, around 1bn litres of ethanol would be needed. India
produces ethanol as a sugar manufacturing by-product and would need sugar
measuring growth | PRAJ Industries September 29, 2014
production of ~25 million tons or more to fulfil 5% blending, considering the demand for molasses from the chemical and liquor manufacturing sector as well.
Ethanol availability with sugar production
Source: PhillipCapital India Research
The increasing ethanol blending augurs well for the profitability of sugar
companies. OMCs — Indian Oil, Hindustan Petroleum and Bharat Petroleum — had come out with a tender to procure 1.33bn litres of ethanol to implement the
mandatory 5% blending programme. As against fixed pricing, the government has allowed sugar companies to participate in tenders based on competitive
bidding, which has resulted in better realization of ethanol.
Cost economics in ethanol blending Ethanol blending is successful in Brazil and the US, with blending to the extent of 25% and 10%, respectively. The fuel blending has led to a sharp increase in ethanol production in the US — from 3.5bn gallons in 2004 to 13.2bn gallons in 2013. Brazil has developed flexi-fuel cars, which can run on any combination of petrol and ethanol and currently about 90% of its new cars are flexi fuel. India: The ethanol is produced from Molasses which is a bi-product in sugar manufacturing from sugar cane. Molasses prices in India are volatile and vary widely with the sugar cycle –they are also significantly different in different part of the country due to state controls on molasses movement. The average molasses prices in India vary from Rs 3,000 per metric ton to Rs 6,000 per metric ton in different states. Considering, molasses price of Rs 5,500 per ton, the variable cost for ethanol works out at Rs 26 per litre. Oil marketing companies have agreed to buy ethanol at Rs 41 per litre. Considering these dynamics, we believe ethanol blending through the by-product route is viable and will continue.
Ethanol cost analysis from direct cane conversion
Source: PhillipCapital India Research, Industry
-‐800
-‐600
-‐400
-‐200
-‐
200
400
18 20 22 24 26 28 30
-‐
10
20
30
40
50
1500 1700 1900 2100 2300 2500 2700 2900 3100 3300
Varia
ble cost Rs p
er ltr
Cane Cost Rs per ton
measuring growth | PRAJ Industries September 29, 2014
Ethanol cost analysis from molasses
Source: PhillipCapital India Research, Industry
The government may also allow the direct conversion of cane into ethanol (as done in Brazil) to increase ethanol production. The cane costs vary between Rs
2,000 per ton to Rs 2,800 per ton in different states. For direct conversion of sugar cane to ethanol, ethanol priced at Rs 415 is viable if the cane cost is lower
than Rs 2,500. However, since cane in India is used for making sugar and ethanol is bi-product, our analysis shows the direct conversion of cane into ethanol is
viable if cane cost is de-controlled or sugar prices remain lower than ~Rs 27 per kg.
Cost economics in Brazil Brazil produces around 6.2bn gallons of ethanol from sugar and uses around 50% of its cane output for ethanol manufacturing while rest is used for sugar
production. Its cane cultivation is spread over 10.3mn hectares and its sugar factories are able to produce ethanol or sugar depending on requirements.
Brazil is the lowest-cost producer of ethanol (USD 0.5 per litre) due to better ethanol recovery and low cane cost. Ethanol blending is viable when crude
prices are above USD 80 per barrel (equivalent ethanol price USD 2.4 per gallon.
Ethanol cost analysis from direct conversion of Sugar cane
Source: PhillipCapital India Research, Industry
0
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25
30
35
40
45
2500 3000 3500 4000 4500 5000 5500 6000 6500
Ethano
l variable cost Rs p
er ltr
Molasis price Rs per ton
0.0
0.5
1.0
1.5
2.0
2.5
15 17 19 21 23 25 27 29 31 33
Ethano
l cost U
SD per gallon
Cane cost USD per ton
measuring growth | PRAJ Industries September 29, 2014
Cost economics in the US Ethanol in the US is not used as a fuel extender but as an oxygenate additive for pollution control. The amount of ethanol used in blends is 10% for cities
needing carbon monoxide control in winter months and 5.7% in the reformulated gasoline mandated for sale in smog areas such as California. The
US administration has been supporting the farm sector by providing a subsidiary in the form of tax credit equivalent to USD 0.12 per litre (Rs 4.8/litre).
US manufacture ethanol mainly from corn and uses around 40% of the country's
corn production to make the fuel. It is the largest market for biofuels — seeing stabilization at 13-14bn gallons per year. Corn prices vary from USD 2 per bushel
to USD 6 per bushel, while ethanol selling price is around USD 2.5/gallon. The conversion cost from corn to ethanol is around USD 0.6 to USD 0.7 per gallon.
The variable cost study shows the blending will continue below USD 5 per bushel at prevailing prices. Crude prices above USD 95 per barrel make ethanol
blending economical in the US.
Ethanol cost analysis from Corn
Source: PhillipCapital India Research, Industry
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1 2 3 4 5 6 7
Ethano
l cost U
SD per gallon
Corn cost USD per bushel
measuring growth | PRAJ Industries September 29, 2014
Financials Profit & Loss As at 31st Mar, Rs mn FY14 FY15E FY16E FY17E Net sales 9,858 10,384 12,341 14,906 Growth, % 7 5 19 21 Total income 9,858 10,384 12,341 14,906 Raw material expenses -4,791 -5,005 -6,022 -7,341 Employee expenses -1,240 -1,339 -1,527 -1,756 Other Operating expenses -2,961 -3,196 -3,579 -4,044 EBITDA (Core) 867 844 1,213 1,765 Growth, % (4.2) (2.6) 43.7 45.5 Margin, % 8.8 8.1 9.8 11.8 Depreciation -238 -242 -278 -297 EBIT 629 602 935 1,468 Growth, % (8.7) (4.4) 55.3 57.0 Margin, % 6.4 5.8 7.6 9.8 Interest paid -14 -15 -16 -17 Other Non-Operating Income 238 238 250 262 Pre-tax profit 852 824 1,168 1,713 Tax provided -204 -214 -304 -445 Profit after tax 648 610 865 1,268 Others (Minorities, Associates) -19 -32 -65 -89 Net Profit 629 578 800 1,179 Growth, % (10.9) (8.1) 38.3 47.3 Net Profit (adjusted) 629 578 800 1,179 Unadj. shares (m) 177 177 177 177 Wtd avg shares (m) 177 177 177 177 Source: PhillipCapital India Research, Company
Cash Flow Y/E Mar, Rs mn FY14 FY15E FY16E FY17E Pre-tax profit 852 824 1,168 1,713 Depreciation 238 242 278 297 Chg in working capital -746 146 144 158 Total tax paid -226 -190 -269 -394 Cash flow from operating activities 118 1,023 1,322 1,774 Capital expenditure -532 -650 -650 -350 Chg in investments 719 258 120 0 Cash flow from investing activities 187 -392 -530 -350 Free cash flow 305 631 792 1,424 Equity raised/(repaid) 74 65 65 65 Debt raised/(repaid) 74 0 0 0 Dividend (incl. tax) -461 -461 -524 -628 Cash flow from financing activities -364 -396 -459 -563 Net chg in cash -58 236 334 861 Source: PhillipCapital India Research, Company
measuring growth | PRAJ Industries September 29, 2014
Balance Sheet As at 31st Mar, Rs mn FY14 FY15E FY16E FY17E Cash & bank 572 691 748 1,058 Debtors 3,203 3,414 4,057 4,901 Inventory 2,221 2,289 2,540 2,867 Loans & advances 2,493 2,543 2,594 2,646 Other current assets 100 102 104 106 Total current assets 8,589 9,038 10,043 11,578 Investments 910 652 532 532 Gross fixed assets 4,358 5,008 5,658 6,008 Less: Depreciation -1,132 -1,375 -1,653 -1,950 Add: Capital WIP 16 16 16 16 Net fixed assets 3,241 3,649 4,020 4,073 Total assets 12,740 13,339 14,595 16,182 Current liabilities 4,287 4,552 5,410 6,534 Provisions 2,124 2,337 2,570 2,827 Total current liabilities 6,411 6,888 7,980 9,362 Non-current liabilities 290 315 350 401 Total liabilities 6,701 7,203 8,330 9,763 Paid-up capital 355 355 355 355 Reserves & surplus 5,470 5,535 5,600 5,665 Shareholders’ equity 6,039 6,136 6,266 6,420 Total equity & liabilities 12,740 13,339 14,595 16,182 Source: PhillipCapital India Research, Company
Profitability, Productivity, Liquidity and Valuation Ratios Y/E Mar, Rs mn FY14 FY15E FY16E FY17E Per Share data EPS (INR) 3.5 3.3 4.5 6.6 Growth, % (10.9) (8.1) 38.3 47.3 Book NAV/share (INR) 32.8 33.2 33.6 33.9 FDEPS (INR) 3.5 3.3 4.5 6.6 CEPS (INR) 4.9 4.6 6.1 8.3 CFPS (INR) (0.7) 4.4 6.0 8.5 DPS (INR) 2.2 2.2 2.5 3.0 Return ratios Return on assets (%) 5.2 4.8 6.3 8.3 Return on equity (%) 10.8 9.8 13.4 19.6 Return on capital employed (%) 7.9 7.2 9.7 13.6 Turnover ratios Asset turnover (x) 1.6 1.4 1.6 1.9 Sales/Total assets (x) 0.8 0.8 0.9 1.0 Sales/Net FA (x) 3.2 3.0 3.2 3.7 Working capital/Sales (x) 0.4 0.4 0.3 0.3 Fixed capital/Sales (x) 0.1 0.1 0.0 0.0 Liquidity ratios Current ratio (x) 2.0 2.0 1.9 1.8 Quick ratio (x) 1.5 1.5 1.4 1.3 Interest cover (x) 43.7 39.8 58.9 88.0 Dividend cover (x) 1.6 1.5 1.8 2.2 Total debt/Equity (%) 3.7 3.6 3.6 3.5 Net debt/Equity (%) (6.2) (8.1) (9.0) (14.0) Valuation PER (x) 17.2 18.7 13.5 9.2 PEG (x) - y-o-y growth (1.6) (2.3) 0.4 0.2 Price/Book (x) 1.9 1.8 1.8 1.8 Yield (%) 3.6 3.6 4.1 4.9 EV/Net sales (x) 1.1 1.0 0.8 0.7 Source: PhillipCapital India Research, Company
measuring growth | PRAJ Industries September 29, 2014
Contact Information (Regional Member Companies) SINGAPORE | MALAYSIA | HONG KONG | JAPAN | INDONESIA | CHINA | THAILAND | FRANCE | UNITED KINGDOM | UNITED STATES | AUSTRALIA | SRI LANKA PhillipCapital (India) Private Limited No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013. Tel: (9122) 2300 2999 Fax: (9122) 6667 9955 www.phillipcapital.in
Management (91 22) 2300 2999(91 22) 6667 9735
Research Economics Metals Technicals
Dhawal Doshi (9122) 6667 9769 Anjali Verma (9122) 6667 9969 Dhawal Doshi (9122) 6667 9769 Subodh Gupta, CMT (9122) 6667 9762Priya Ranjan (9122) 6667 9965
Engineering, Capital Goods Oil&Gas, Agri Inputs Production ManagerAnkur Sharma (9122) 6667 9759 Gauri Anand (9122) 6667 9943 Ganesh Deorukhkar (9122) 6667 9966
Manish Agarwalla (9122) 6667 9962 Hrishikesh Bhagat (9122) 6667 9986 Deepak Pareek (9122) 6667 9950Paresh Jain (9122) 6667 9948 Database ManagerPradeep Agrawal (9122) 6667 9953 Infrastructure & IT Services Pharma Vishal Randive (9122) 6667 9944
Vibhor Singhal (9122) 6667 9949 Surya Patra (9122) 6667 9768Consumer, Media, Telecom Varun Vijayan (9122) 6667 9992 Sr. Manager – Equities SupportNaveen Kulkarni, CFA, FRM (9122) 6667 9947 Retail, Real Estate Rosie Ferns (9122) 6667 9971Vivekanand Subbaraman (9122) 6667 9766 Midcap Abhishek Ranganathan, CFA (9122) 6667 9952Manish Pushkar, CFA (9122) 6667 9764 Vikram Suryavanshi (9122) 6667 9951 Neha Garg (9122) 6667 9996
CementVaibhav Agarwal (9122) 6667 9967Sales & Distribution Kinshuk Bharti Tiwari (9122) 6667 9946 Sidharth Agrawal (9122) 6667 9934 Sales Trader Zarine Damania (9122) 6667 9976Ashvin Patil (9122) 6667 9991 Bhavin Shah (9122) 6667 9974 Dilesh Doshi (9122) 6667 9747 Shubhangi Agrawal (9122) 6667 9964 Dipesh Sohani (9122) 6667 9756 Suniil Pandit (9122) 6667 9745Kishor Binwal (9122) 6667 9989 Execution
Mayur Shah (9122) 6667 9945
Vineet Bhatnagar (Managing Director)Jignesh Shah (Head – Equity Derivatives)
Automobiles
Banking, NBFCs
Corporate Communications
measuring growth | PRAJ Industries September 29, 2014
Disclosures and Disclaimers
PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may or may not match or may be contrary at times with the views, estimates, rating, target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd. This report is issued by PhillipCapital (India) Pvt. Ltd. which is regulated by SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only and neither the information contained herein nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment or derivatives. The information and opinions contained in the Report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication to future performance. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax and financial advisors and reach their own regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. In no circumstances it be used or considered as an offer to sell or a solicitation of any offer to buy or sell the Securities mentioned in it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which we believe are reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request. Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst have no known conflict of interest and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific views or recommendations contained in this research report. The Research Analyst certifies that he /she or his / her family members does not own the stock(s) covered in this research report. Independence/Conflict: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it or its employees, directors, or affiliates may hold either long or short positions
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