Praj Industries: FPI holding at 6-quarter low, stock down 52% in 2025; what's happening?

Praj Industries, which designs, builds, and commissions ethanol plants for clients, has seen its shares tumbling 52 per cent in 2025 so far, with foreign holding in this stock now at a six-quarter low. On Tuesday, the stock fell 2.70 per cent to Rs 398.05 level, now down 54.5 per cent from its 52-week high of Rs 874.30 hit on January 1.

Praj Industries' profit has been falling quarter after quarter. The numbers weighed down by cautious sentiment in the domestic ethanol market following the achievement of the 20 per cent EBP target and the absence of new blending mandates. The prevailing geopolitical environment and uncertainty surrounding US tariff policies further delayed capital expenditure decisions, analysts said.

As a result, Q1 consolidated revenue fell 8.4 per cent, while profit dived 93.7 per cent.

FPI holding in the company stood at 16.9 per cent at the end of June quarter compared with 18.9 per cent in March 2024.

In a earnings call, Praj said the current installed capacity of ethanol production in the country now exceeds EBP20 requirement. The discussions are ongoing regarding additional blending mandates, the management said adding that the industry is anticipating a firm announcement on the same.

The management said the excess installed capacity has led to temporary slowdown in conversion of new inquiries into firm orders and new greenfield ethanol plants. It sees this short-term situation to improve once the government announces its plans to increase in ethanol blending. Introduction of flex-fuel vehicles and engines may also give new impetus, the management said.

Despite the order slowdown, Praj Industries said its market share stayed intact.

"Government of Maharashtra has made an announcement of Viksit Maharashtra 2047. This is a positive development. It talks of bioenergy policy that promises Rs. 28,000 crores in investments over the next five years in various products derived from sugarcane," it the management said.

Order flows

Axis Securities in a August 13 noted that order inflows for the company moderated to Rs 795 crore in the June quarter against Rs 1,032 crore in the preceding quarter, with all three business segments reporting sequential declines.

"While the management has expressed confidence in regaining the momentum, the timing and pace of such recovery remain uncertain. The company is, however, seeing strong traction in the CBG and services businesses, and a healthy enquiry pipeline for biogenic CO2 capture solutions," Axis Securities said.

The management in its earnings call, whose transcript was available on stock exchanges on August 18, said it was witnessing slowness in inquiries of greenfield plants, but is focusing on offering plant medications as well as solutions as co-products such as Distillers Corn Oil called DCO and rice protein.

"These are gaining increasing interest from the existing ethanol producers.

On the existing projects and on the execution front, liquidity challenges are resulting in extended execution cycles. In few cases, we are witnessing delays in site preparedness and pre-commissioning readiness due to the lack of funds," it said.

Axis Securities maintained 'Sell' and a target price of Rs 350 on the stock.