Neogen Chemicals Q4 FY26 earnings call

Neogen Chemicals reported a strong Q4 FY26, with consolidated revenue growing 22% year-on-year to INR 247 crore. EBITDA increased 21% year-on-year to INR 44 crore, maintaining a resilient margin of 17.8%. Profit after tax for the quarter stood at INR 11 crore. For the full fiscal year FY26, revenue reached INR 862 crore, an 11% year-on-year growth, with EBITDA at INR 137 crore and PAT at INR 29 crore. The company also saw a significant improvement in cash flow, with net cash from operating activities turning positive at INR 14.6 crore in H2 FY26.

The Pakhajan greenfield site is advancing as planned, with commercial manufacturing for electrolyte targeted for H1 FY27 and electrolyte salts for H2 FY27. The project has achieved a significant operational milestone with the completion of mechanical assembly and successful transition into the trial run phase for the specialized electrolyte plant. Neogen has received provisional approval from additional global customers for lithium electrolyte salts and completed site audits for multiple US-based electrolyte makers, positioning it well for commercial supplies.

Project timelines have been revised, with the Dahej Phase 1 project now budgeted at INR 428 crore and expected to be completed by February 2027. Concurrently, the Pakhajan Phase 2 project has a revised cost of INR 1,367 crore and is expected to be completed by March 2027. These revisions are attributed to design-led optimization, integration of advanced Japanese technologies, and higher localization of critical subcomponents. The total gross block for Neogen Ionics is projected to be around INR 1,700-1,800 crore by the end of FY27.

Neogen's strategic shift towards battery materials is supported by a promoter group capital infusion of INR 161 crore and an expected $20 million equity contribution from Japan's Morita JV in H1 FY27. The company also received a recent insurance tranche of INR 60 crore in February 2026, bringing total cumulative on-account claims to INR 140 crore plus INR 7 crore salvage realization, with a net claim receivable of INR 203 crore. These funds are deemed sufficient for the completion of current projects and initial working capital requirements.

For FY27, Neogen expects standalone revenue (excluding battery chemicals) in the range of INR 875-950 crore, with Neogen Ionics contributing over INR 300 crore, primarily in H2. The company projects standalone revenue to reach over INR 1,100 crore in FY28 and INR 1,200-1,400 crore by FY29 based on regular demand. With current investments, consolidated revenue is targeted to be INR 3,700-4,200 crore by FY29, with potential for further growth through brownfield expansions.

The global chemical industry continues to face challenges such as overcapacity, pricing volatility, and subdued demand. Lithium prices, though volatile, have stabilized closer to a normal range of $15-$25 for lithium carbonate, which management considers a long-term stable price. Electrolyte pricing is expected to be in the range of $6-$8 per kg. Bromine prices have also stabilized after earlier fluctuations, contributing to stable input costs.

Neogen demonstrated improved operating efficiency, leading to positive net cash from operating activities in H2 FY26. The company strategically negotiated longer credit terms with suppliers, resulting in a temporary spike in trade payables, as a measure to manage liquidity while awaiting insurance claim settlements. Management aims to balance debtors and creditors and improve stock utilization as plant utilization levels increase.