NGLFINE - NGL Fine Chem

📊 NSE: NGLFINE 🏢 Pharmaceuticals - Indian - Bulk Drugs 📅 Last Updated: 12/14/2025 10:31

💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, Animal API contributed 90% of revenue (down from 94% in Q2 FY25), Human API 4% (up from 3%), Intermediates 5% (up from 2%), and Formulations 1% (down from 2%). Overall revenue grew 28.64% YoY to INR 120.26 Cr in Q2 FY26.

Geographic Revenue Split

NGL derives approximately 25% of its sales from the domestic market and the remaining 75% from export sales to semi-regulated markets in Europe, Asia Pacific, West Asia, and Latin America.

Profitability Margins

Operating margins moderated to 10.2% in FY25 from approximately 17% in FY24 due to intense competition and rising costs. However, Q2 FY26 saw a recovery with EBITDA margins expanding to 14.27% from 10.54% YoY.

EBITDA Margin

EBITDA margin stood at 14.27% in Q2 FY26, representing a 373 bps improvement YoY. Core profitability is recovering from a low of 10.2% in FY25 as demand stabilizes and volume increases.

Capital Expenditure

The company is undertaking a Greenfield expansion at Tarapur with a total estimated capex of INR 160 Cr. As of Q2 FY26, INR 133.29 Cr has been invested, with commercial production expected in the latter half of FY27.

Credit Rating & Borrowing

CRISIL has a 'Negative' outlook due to subdued margins, while ICRA maintains a 'Stable' outlook. Interest coverage remained healthy at 11.55 times in FY25 despite margin pressure.

⚙️ Operational Drivers

Raw Materials

Major raw materials include N-2 and N-3 level intermediates and solvents used in API manufacturing. These are susceptible to price volatility which impacts margins due to short-term contracts.

Capacity Expansion

Greenfield expansion at Tarapur is underway (INR 160 Cr) to serve regulated markets. Brownfield expansion at subsidiary Macrotech for intermediates is completed and commercial production has started.

Raw Material Costs

Raw material costs are a significant portion of the cost base; realizations were impacted in FY25 by competition, while revenue remained stable due to increased volumes. Procurement is managed via short-term contracts.

Manufacturing Efficiency

75% of production currently comes from Zero Liquid Discharge (ZLD) facilities, reflecting high environmental compliance and operational standards.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth will be driven by entering regulated markets (US and Europe) which offer higher margins, launching new products from the pipeline, and the commissioning of the Tarapur Greenfield plant in H2 FY27.

Products & Services

Key products include veterinary APIs such as Nitroxynil, Clorsulon, and Buparvaquone, which account for 85-90% of total sales.

Brand Portfolio

NGL Fine-Chem Limited.

New Products/Services

Validation batches for regulated markets are currently being manufactured in the new Tarapur clean rooms to generate data for regulatory submissions.

Market Expansion

Targeting regulated markets in the US and Europe to diversify from current semi-regulated market dominance.

🌍 External Factors

Industry Trends

The industry is seeing a recovery in demand for animal health APIs. There is a clear trend toward capacity expansion and shifting focus to regulated markets to capture higher margins and offset competitive pricing in semi-regulated regions.

Competitive Landscape

Mid-sized player facing intense competition from both domestic Indian manufacturers and international players, particularly in the unregulated market segments.

Competitive Moat

Moat is built on decades of experience in API manufacturing, a strong global client base of over 400 customers, and partial backward integration for basic chemicals which supports a competitive cost proposition.

Geopolitical Risks

Exposure to international markets in Europe, Latin America, and Asia Pacific makes the company sensitive to global trade barriers and regulatory changes.

⚖️ Regulatory & Governance

Industry Regulations

Regulatory audits for the new Tarapur facility are anticipated to commence in Q2 FY27. Successful audits are a prerequisite for commercial production for regulated markets.

Environmental Compliance

75% of production is from Zero Liquid Discharge facilities. The company invested INR 133.29 Cr in the Tarapur project which includes high-standard clean rooms for regulatory compliance.

Legal Contingencies

The auditor's report for FY25 expressed an unmodified opinion on internal financial controls; no specific pending litigation values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the successful outcome of regulatory audits for the Tarapur plant, which is critical for the H2 FY27 production timeline and margin expansion strategy.