Shares of Neogen Chemicals, a prominent manufacturer of bromine and lithium-based specialty chemicals, saw a significant boost in today’s trading session, rising by 6.40% to reach ₹1,651 per share. This surge comes on the heels of the company’s recently reported financial results for the quarter ending in June, which showed solid growth despite a challenging operating environment.
Neogen Chemicals posted a 9% increase in revenue from operations, bringing in ₹180 crore for the quarter. This growth was primarily driven by higher volumes, especially from products outside of the agricultural chemicals sector, which performed well even amid weaker pricing conditions. The company’s performance in these segments has been a key factor in maintaining investor confidence, as evidenced by the sharp rise in share price.
One of the standout aspects of Neogen’s quarterly performance was the growth in its organic chemicals segment. Revenue from this division rose by 17% year-over-year, reaching ₹142 crore in Q1.
This robust growth helped offset the decline in the inorganic chemicals segment, where revenue dropped to ₹38 crore from ₹44 crore in the same period last year. The decline in the inorganic segment was largely attributed to a significant fall in lithium raw material prices, a challenge that many in the industry have faced.
Despite these headwinds, Neogen Chemicals demonstrated resilience. The company’s EBITDA increased by 10% year-over-year to ₹30.8 crore, with margins holding steady at 17.1%. This stability in margins, despite pricing pressures, is a testament to the company’s operational efficiencies and its ability to navigate a tough market environment.
Profit after tax also saw a healthy rise, growing by 18% to ₹11.5 crore, while earnings per share (EPS) for Q1 FY25 stood at ₹4.35, up from ₹3.92 in the previous fiscal year’s first quarter.
The market’s reaction to these results has been positive, with shares of Neogen Chemicals climbing in response to the news. Investors seem encouraged by the company’s ability to grow its top line in a difficult market and its focus on expanding into new areas such as battery chemicals and semiconductors.
The management of Neogen Chemicals has slightly revised its revenue guidance for the fiscal year 2026, adjusting the base business outlook to ₹9–10 billion, down from the previous range of ₹9.0–10.5 billion. This adjustment, particularly at the upper end, reflects the ongoing softness in demand within the chemical industry. However, despite this conservative revision, the company remains optimistic about its growth prospects, particularly in the battery chemicals sector.
According to Kotak Institutional Equities, the outlook for Neogen’s battery chemicals business remains promising. The brokerage firm has noted strong interest from international customers in Neogen’s lithium salts, positioning the company as a cost-effective alternative to Chinese suppliers.
Furthermore, the anticipated commercialisation of several major electric vehicle (EV) battery plants in India—including those by Ola, Exide, and Amara Raja—over the coming quarters is expected to boost Neogen’s business significantly.
The company’s management is particularly optimistic about the potential to service over 5 GWh of domestic battery capacity by the second half of FY2026. They also foresee export demand for salts exceeding the company’s peak capacity of 5.5 KTPA around the same time. These developments, coupled with an attractive RoCE of around 20% for existing salt contracts and EBITDA margins in the range of 16-17%, paint a positive picture for Neogen’s future growth.
In addition to its battery chemicals business, Neogen Chemicals is making inroads into the semiconductor industry. The company has begun supplying specialty intermediates as a Tier-2 supplier to international customers, a move that could eventually lead to a larger presence in India’s burgeoning semiconductor sector. The acquisition of BuLi Chem, which includes products for this segment, has already shown strong traction, adding another layer of growth potential for the company.
Reflecting these positive developments, Kotak Institutional Equities has raised its EPS estimate for Neogen Chemicals for FY2025 by 7% while keeping the FY2026-27 estimates largely unchanged. As a result, the brokerage has revised its target price for the stock to ₹2,000 per share, up from ₹1,870, signaling confidence in the company’s ability to capitalize on emerging opportunities in both the domestic and international markets.
