Neogen Chemicals Q1 FY27 earnings call

Neogen Chemicals delivered a strong Q1 FY27, with consolidated revenue reaching INR 250 crore, marking a 34% year-on-year growth. EBITDA increased by 53% to INR 48.2 crore, leading to a 260 basis points expansion in EBITDA margins to 19.3%. Profit after tax surged by 67% year-on-year to INR 17.1 crore, with a PAT margin of 6.8%. This performance was driven by volume growth across core business verticals and sustained customer demand.

The Neogen Ionics (battery chemicals) segment demonstrated robust performance, generating INR 19 crore in revenue in Q1 FY27, a significant increase from INR 5 crore in Q1 FY26. The company maintains its FY27 revenue guidance of INR 300 crore for battery chemicals, comprising INR 200 crore from salt and INR 100 crore from electrolyte. Long-term projections indicate revenue potential of INR 2,400-2,900 crore by FY29 from current CAPEX, with the segment potentially contributing 50% of total business in five years.

Reconstruction of the Dahej replacement facility is nearing completion, with trial runs underway and commercial production expected to commence within Q2 FY27. On the insurance front, cumulative recoveries to date stand at INR 164 crore. The net claim receivable is INR 186 crore, and the company continues to engage with insurers to expedite final settlement, including additional recoveries under loss on profit policies.

The Board has approved a fundraise of INR 600 crore through a QIP to support long-term capital requirements, deleverage the balance sheet, and create headroom for future growth. This QIP is expected to reduce annual finance costs by INR 40-50 crore. The total CAPEX for battery chemicals is INR 1,800 crore, with INR 1,300 crore already spent and the remaining INR 500 crore to be completed by FY27 end, funded by debt, Morita's contribution, and INR 30-40 crore equity from Neogen.

The base business demonstrated strong resilience, with organic chemicals growing 18% to INR 194 crore and inorganic chemicals surging 158% to INR 57 crore. Based on Q1 performance, the standalone revenue guidance for FY27 has been revised upwards from INR 875-950 crore to INR 950-1,050 crore. The company expects the base business to cross INR 1,000 crore in FY27 and grow 10-15% in FY28, targeting INR 1,100-1,200 crore.

Neogen is strategically positioned to benefit from government support for battery materials and the 'China+1' shift, particularly in the US market. The company has secured provisional approvals from four international customers for lithium electrolyte salts and completed final site audits. With Japanese technology partnerships, Neogen aims to serve both domestic and global non-FEOC, non-PAP demand, leveraging its established technology and ability to scale capacity efficiently.