NEOGEN - Neogen Chemicals

📊 NSE: NEOGEN 🏢 Chemicals 📅 Last Updated: 12/14/2025 10:27

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 13% YoY to INR 777.6 Cr in FY25, driven by healthy volumes in the base business and BuLi Chem. Neogen Ionics contributed INR 12 Cr in its first year. Standalone revenue rose 10% to INR 773.7 Cr. However, Q2 FY26 consolidated revenue growth slowed to 8% (INR 208.7 Cr) due to the temporary suspension of the Dahej plant.

Geographic Revenue Split

Not explicitly disclosed in percentages, but the company reports a global distribution network supporting export growth and is strategically diversifying into stable geographies to mitigate regional economic downturns.

Profitability Margins

FY25 Standalone PAT margin improved to 6.26% from 5.86% (a 7% increase). Consolidated PAT for Q2 FY26 dropped 69% YoY to INR 3.4 Cr, with PAT margins contracting by 405 bps to 1.6% due to elevated operating costs and interest expenses following the Dahej fire incident.

EBITDA Margin

FY25 Standalone EBITDA margin grew 240 bps to 19.0% (INR 147.1 Cr). In Q2 FY26, consolidated EBITDA margins fell 349 bps to 14.4% (INR 30.0 Cr) due to higher insurance premiums, increased job work costs, and performance-linked employee incentives.

Capital Expenditure

Neogen recently raised INR 253 Cr to fund large-scale capex. Ongoing investments include the organic Dahej SEZ plant rebuild and battery business expansion. The company is also utilizing INR 200 Cr from NCDs and INR 65 Cr in unsecured loans to support these initiatives.

Credit Rating & Borrowing

CRISIL maintains a 'Negative' outlook due to liquidity pressure. Standalone debt rose sharply to INR 722 Cr in Q2 FY26 (Net Debt INR 595 Cr). Interest coverage stood at 2.56x in FY25 but faced pressure in Q2 FY26 as interest costs rose 53% YoY to INR 19.5 Cr.

⚙️ Operational Drivers

Raw Materials

Key materials include Lithium salts, Bromine, and various chemical intermediates. While specific % of total cost per material is not disclosed, raw material price fluctuations and oversupply-led weak pricing significantly impacted FY25 margins.

Import Sources

Sourced from multiple suppliers across different global regions to ensure supply chain resilience; specific countries are not listed but the strategy emphasizes vendor diversification.

Key Suppliers

Not disclosed by name; however, the company utilizes a procurement team to manage long-term relationships with multiple regional suppliers to secure cost-effective materials.

Capacity Expansion

Current operations include plants at Mahape (Navi Mumbai), Karakhadi (Vadodara), and Dahej. The Dahej SEZ organic plant is undergoing a rebuild following a fire, with resumption planned for FY27. Future revenue targets of INR 950-1,000 Cr are based on current installed capacity.

Raw Material Costs

Inventory turnover improved 22% to 2.25 in FY25, indicating better material movement. Procurement strategies focus on maintaining adequate inventory levels to hedge against price volatility in chemical intermediates.

Manufacturing Efficiency

Operating leverage from higher volumes contributed to a 27% EBITDA growth in FY25. Manufacturing efficiency is supported by R&D-led process improvements and strategic job work to maintain volumes during plant outages.

Logistics & Distribution

Not disclosed as a specific percentage of revenue, but logistical disruptions are cited as a key business risk being monitored quarterly.

📈 Strategic Growth

Expected Growth Rate

10%

Growth Strategy

Neogen targets INR 1,150 Cr revenue by FY28 through a 'double-digit' growth trajectory. Strategy includes: 1) Expanding the battery chemicals business (Lithium salts/electrolytes), 2) Increasing focus on high-margin Pharmaceutical and Custom Manufacturing (CSM) segments to offset Agrochemical cyclicality, and 3) Leveraging the BuLi Chem integration for customer cross-selling.

Products & Services

Specialty chemicals, Lithium salts, Electrolytes for Lithium-ion batteries, Bromine-based compounds, and Inorganic chemicals used in Pharma and Agrochemicals.

Brand Portfolio

Neogen Chemicals, BuLi Chem, Neogen Ionics.

New Products/Services

Locally sourced electrolytes and lithium salts for the EV battery chain; expected to bolster the business risk profile as the battery business ramps up.

Market Expansion

Expansion into the Lithium-ion battery sector and deepening penetration in the Japanese market through Neogen Chemicals Japan Corporation.

Market Share & Ranking

Not disclosed in percentage, but described as having a 'first-mover advantage' in the Indian electrolyte and lithium salt manufacturing space.

Strategic Alliances

Joint Venture: Dhara Fine Chem Industries; Subsidiaries: Neogen Ionics Limited and Neogen Chemicals Japan Corporation Limited.

🌍 External Factors

Industry Trends

The industry is shifting toward Lithium-ion battery localization in India. Neogen is positioning itself as a key supplier of electrolytes to capture this growth, moving away from a heavy reliance on traditional Agrochemical cycles.

Competitive Landscape

Faces intense global competition, particularly from cheap imports that lead to price volatility.

Competitive Moat

Moat is built on: 1) Technical expertise in complex Bromine and Lithium chemistry, 2) Long-term R&D track record (20+ years), and 3) High switching costs in the CSM and Pharma segments due to rigorous quality approvals.

Macro Economic Sensitivity

Highly sensitive to global chemical pricing and demand; FY25 performance was impacted by sluggish global demand despite volume growth.

Consumer Behavior

Shift toward Electric Vehicles (EVs) is driving demand for Neogen's new battery chemical portfolio.

Geopolitical Risks

Geopolitical disruptions and policy changes in key markets are monitored quarterly; these factors currently impact supply chain costs and logistics.

⚖️ Regulatory & Governance

Industry Regulations

Adheres to IND AS accounting standards and stringent safety protocols for chemical manufacturing. Operations are subject to environmental and pollution control board norms.

Environmental Compliance

Maintains zero effluent discharge deviations and monitors compliance through daily checks and quarterly safety audits.

Taxation Policy Impact

Effective tax rate for FY25 was approximately 25% (INR 19.5 Cr PBT vs INR 5.8 Cr Tax in Standalone).

Legal Contingencies

Not disclosed in absolute INR values, but the company tracks litigations through weekly compliance checklists and consults external legal experts for contract vetting.

⚠️ Risk Analysis

Key Uncertainties

1) Fire and operational accidents (Dahej incident caused INR 14.1 Cr loss), 2) Volatility in Lithium prices impacting battery segment margins, 3) Elongated working capital cycles.