Once celebrated as a bioenergy multi-bagger and a favourite of investors riding India’s ethanol wave, this clean-tech engineering stock has suddenly slipped into one of its steepest falls ever.
From booming ethanol orders to brewery expansion, everything seemed perfectly aligned for its next phase of growth, until the rally reversed and the share collapsed over 60 percent, leaving the market stunned. But what exactly triggered this dramatic slide, and can the company stage a strong comeback?
About The Company
Praj Industries Ltd., founded in 1983, is a global biotechnology and engineering company offering sustainable solutions across bioenergy, water treatment, process equipment, breweries, and wastewater management.
The business focuses on environment-friendly, energy-efficient, and farm-to-fuel technologies. It has a market capitalization of Rs. 5,752 crore, and the stock is currently trading at around Rs. 313.
The company has built a strong global presence with more than 1000 customer references in over 100 countries across all six continents. Its innovation strength comes from a team of over 90 technologists, more than 400 patent filings, and a portfolio of 24 Indian and 60 international granted patents. Praj is also known for its TEMPO framework, which covers technology, engineering, manufacturing, project management, and operations and maintenance.
Its manufacturing capabilities are supported by five world-class plants located in Maharashtra, Gujarat, and Karnataka, all strategically positioned near ports and backed by a multi-disciplinary engineering team. The company operates international offices in Thailand, Philippines, and Houston, USA.
As of Q2FY26, the company reported an order book of Rs. 4,419 crore and order intake of Rs. 813 crore. Export revenue contributed 46 percent during the quarter. Within overall revenues, bioenergy accounted for 64 percent, the engineering business for 26 percent, and the high-purity solutions (PHS) segment for 10 percent.
Business Segments
The company has three revenue contributing business segment:
1. The Bio-Energy segment, contributing nearly 62 percent of Praj Industries’ revenue, is anchored by its Bio-Mobility platform, which develops renewable, carbon-neutral fuels for road, air and marine transportation.
Praj has a long-standing leadership in first-generation ethanol technology, offering multi-feed and multi-product plant solutions, upgrades for existing distilleries, and co-product optimisation. Its technology converts sugarcane juice, molasses and grain-based feedstocks into bioethanol, along with value-added outputs such as Distillers’ Corn Oil and rice proteins.
The company’s Bio Products and Services business supports ethanol plants through specialised microbial formulations, enzyme-based solutions and operations and maintenance services, while also providing carbon recovery technologies for process industries.
In second-generation ethanol, Praj offers its proprietary Enfinity technology and, through its partnership with Sekab in Sweden, Celluniti for ethanol production from softwood and forest residues. These technologies can process a wide range of agricultural residues including rice straw, wheat straw, bagasse, corn stover, corn cobs, softwood and empty fruit bunches. They are currently being deployed at three commercial-scale bio-refineries in India, highlighting clear commercial traction.
Praj has also commercialised RenGas, its renewable natural gas technology that produces compressed biogas from agricultural residues and press mud at approximately 30 percent lower operating costs due to specialised microbial cultures. It also generates organic manure as a by-product and produces high-purity methane. An additional bio-bitumen module offers a new revenue opportunity, with applications in road construction.
In sustainable aviation fuel, Praj’s partnership with Gevo enables SAF production using renewable iso-butanol derived from sugars, starch and biomass. The company is also expanding into marine biofuels made from certified lignin-based feedstocks, an area gaining interest from global shipping companies.
2. The High Purity Solutions segment contributes 11 percent of Praj Industries’ revenue and is led by HiPurity Systems Limited, a wholly-owned subsidiary that provides end-to-end solutions for high-purity water to the pharma, biotech, and wellness industries. With over 450 installations globally, the company serves sectors including cosmetics, food and beverage, and nutraceuticals that follow compendial water quality norms. It has launched its ‘Glacier Blue’ COLD WFI brand, enabling clients to achieve up to 90 percent reduction in carbon footprint while supplying Water for Injection to both India and developed markets such as the US.
The Modular Process Systems business offers engineered solutions for biopharma, sterile formulations, and topical and oral products, providing in-house vessel manufacturing, orbital welding, system integration, and testing to help clients achieve faster time-to-market.
The Value-Added Services division supplies specialised products like ozone systems and combi test kits, provides on-site services such as electro-polishing, training, and riboflavin testing, and offers spares and consumables including membranes, chemicals, tubes, fittings, valves, instruments, and pumps.
3. The Engineering Businesses segment accounts for 27 percent of Praj Industries’ revenue and encompasses several key offerings. The Critical Process Equipment and Modularization division supplies static equipment such as pressure vessels, reactors, heat exchangers, and columns, as well as modular process skids and packages. It manages end-to-end projects, providing design support including finite element analysis, process and thermal design, piping design and stress analysis, and software-based skid design using Plant 4D and PDMS, serving industries such as oil and gas, refineries, petrochemicals, and fertilizers.
Praj GenX delivers large-scale modules to external technology partners in traditional energy, energy transition, and climate action, covering technologies like hydrogen electrolysers, waste-to-energy solutions, torrefaction, and carbon capture.
The wastewater treatment (ZLD) business offers integrated, energy-efficient effluent recycling and zero-liquid-discharge solutions, optimising both footprint and operating costs for even the most challenging wastewater streams.
The brewery and beverages division, established in 1994, provides customised plants, equipment, and technology solutions for breweries, offering world-class facilities that minimise water and energy usage and reduce carbon footprint. With over 70 percent market share in India and installations in Africa and Southeast Asia, this division delivers end-to-end support from conceptualisation and design to engineering, installation, and commissioning.
Current Scenario
On a quarter-on-quarter basis, sales increased from Rs. 640 crore to Rs. 842 crore, marking a growth of 31.56 percent. Operating profit rose from Rs. 31 crore to Rs. 56 crore, an expansion of 80.65 percent, while PBT improved from Rs. 10 crore to Rs. 30 crore, registering a 200 percent rise. Net profit increased from Rs. 5 crore to Rs. 19 crore, delivering strong growth of 280 percent. The operating margin improved from 5 percent to 7 percent.
On a year-on-year basis, sales increased from Rs. 816 crore to Rs. 842 crore, a modest growth of 3.19 percent. Operating profit declined from Rs. 86 crore to Rs. 56 crore, a reduction of 34.88 percent, while PBT dropped from Rs. 74 crore to Rs. 30 crore, a decline of 59.46 percent. Net profit fell from Rs. 54 crore to Rs. 19 crore, decreasing by 64.81 percent. The operating margin moderated from 11 percent to 7 percent.
The stock jumped from Rs. 43.55 on 25 March 2020 to Rs. 874 on 1 January 2025, giving investors huge returns of about 1907 percent. But after this strong run, the share began to fall sharply and is now around Rs. 313.55, which means it has dropped nearly 64 percent in less than a year. During the same period, the company’s trailing twelve-month profit growth has also slipped by about 62 percent, showing a clear slowdown in its recent performance.
What Went Wrong?
The company has been impacted by a sudden slowdown in ethanol demand largely due to oversupply. The rapid government push for E20 compliance was previously a major growth driver, but the target was achieved much earlier than expected, leading to a sharp drop in new greenfield ethanol plant orders and delays in ongoing projects.
There have also been concerns in the market about E20 causing issues in vehicles, although the government has clarified that no such problems exist. Future growth could revive once the roadmap for the E30 target becomes clear, but until then, the outlook remains uncertain.
Global factors have added further pressure. Tariffs and a broader slowdown in clean energy investments in the US caused several ethanol and low-carbon fuel projects to be deferred, with customers delaying their investment decisions.
As a result, the order pipeline moved much slower than anticipated. At the same time, the GenX facility has been running at very low utilisation while carrying high fixed costs, although the management has said that GenX orders are gradually returning.
Many energy-transition projects the company had earlier pursued have either stalled or remain on hold. Based on its assessment, the company expects clarity on these projects to take more time and has started reshaping its strategy by targeting a wider customer base across different industries, with a stronger focus on opportunities in oil and gas, piping, structures, and conventional energy markets.
Execution timelines have also lengthened because several customers are facing funding challenges. Many projects are struggling to reach financial closure as lenders are carrying out tighter scrutiny, and project developers are required to bring in a higher equity contribution. This has delayed debt arrangements, slowing down execution cycles.
The company clarified that the issue is not with collections but with customers’ funding arrangements taking longer than before. A few projects that were stuck due to financing issues have recently achieved closure and have begun moving into execution during the quarter.
Cost pressures added to the weakness. Other expenses rose compared to last year due to higher execution activity, and under-absorption of fixed costs at the GenX facility further weighed on EBITDA. The facility’s fixed cost is around Rs. 8.5-9 crore per month, and while there was some absorption this quarter, it remained limited because execution is still at a very small scale due to minimal order booking.
The effective tax rate also increased to 35 percent in Q2FY26 and 37 percent for H1FY26, as the deferred tax asset being created on GenX losses is recognised at a lower rate than Praj Industries’ usual tax rate.
Future Growth Drivers
Shift Toward Lifecycle Services and Brownfield Opportunities
Praj Industries said that while new greenfield ethanol projects are slowing, the company is now shifting its attention to lifecycle services and brownfield opportunities across its existing installed base. This includes work such as plant upgrades, improving efficiency, and adding new co-products to already running facilities.
Global Bioenergy Momentum and Low-Carbon Ethanol Projects
On the international bioenergy side, the company highlighted a steady flow of inquiries from the US for low-carbon ethanol projects that will benefit from 45Z tax credits. Praj is currently executing its first low-carbon ethanol project in the US, which is expected to be commissioned by the end of this financial year. In Latin America, countries like Panama and Argentina are moving towards higher blending mandates, while Indonesia has already introduced a 10 percent mandate. Vietnam plans to move to E20 by 2026, and many African nations are also preparing to introduce or expand ethanol blending requirements.
Growing Pipeline in the Compressed Biogas Segment
In the compressed biogas segment, Praj has begun work on its first Napier Grass-based project. The company is seeing strong inquiry levels for projects based on Napier Grass and press mud. However, the wider market is expected to scale up once India’s national gas grid and its connectivity improve further. The service business continues to grow with strong order inflows for performance enhancers, related solutions, and biogenic CO2 capture technologies.
Breakthrough in Sustainable Aviation Fuel (SAF)
In the sustainable aviation fuel segment, the alcohol-to-jet demo plant at Praj Matrix is now operational and has successfully produced SAF from ethanol. This facility is the world’s first integrated alcohol-to-jet fuel demo plant and is expected to boost customer confidence in both the technology and commercial-scale investment decisions.
Recovery Signs in Brewery and PHS Businesses
The brewery division is seeing early signs of revival, especially in greenfield markets driven by rising demand. In the PHS business, there is growing traction for high-capacity fermenters, complex injectable systems, and blood plasma solutions. New opportunities are also emerging in high-purity water requirements for storage batteries, electric vehicles, solar cells, and semiconductors.
High-Purity Water Opportunities Across New-Age Sectors
For ultra-pure water, Praj noted that new sectors such as semiconductors, solar panel manufacturing, and battery production are opening up in India. These industries require high-purity water at a different scale compared to pharma, but the underlying technology is similar. The company plans to leverage its strong pharma expertise to expand into these new high-growth markets.
Large Opportunity Emerging in Diesel Blending Trials
Praj also mentioned that trials with oil marketing companies and agencies like ARAI are being planned for diesel blending. Once the results are validated, it could unlock significant opportunities, especially because diesel consumption in India is 2-3.5x higher than petrol due to heavy transport usage. This opportunity could potentially be larger than the E20 ethanol blending programme.
CIP Dispatches Expected to Ease Working Capital Pressure
Management added that dispatches under the Contracts-in-Progress (CIP) category should start moving out by December or January. They expect this to ease the temporary working capital blockage seen this quarter, and operating cash flows should improve as these dispatches roll out over the next two to three months.
-Manan Gangwar
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