Neogen Chemicals Q4 Results Review - Focus On Electrolyte Capex, Execution: ICICI Direct

ICICI Direct Report

Neogen Chemicals Ltd.'s revenues were above our estimates while Ebitda came in below estimates due to lower gross processing margin.

Reported revenue growth of 30.1% YoY to Rs 203.9 crore, led by higher growth from both organic chemicals Rs 138 crore (up 39% YoY) and inorganic chemicals Rs 66 crore (up 14% YoY).

Neogen Chemicals' gross margins fell 240 basis points YoY to 40.1% while Ebitda margin declined 100 bps YoY to 16%. Absolute Ebitda was up 22% YoY to Rs 32.6 crore. Profit after tax declined 8% YoY to Rs 14.3 crore.

Key triggers for future price performance:

• Phase I and Phase II capex at Dahej bodes well for advance intermediates and custom synthesis revenue growth.

• Greenfield expansion of electrolyte and specialty lithium salts for dedicated battery materials to aid revenue growth.

• The management commitment towards achieving 25-30% growth in revenue and Ebitda levels on the back of volume growth in the legacy business including revenues from recently acquired BuLi chemicals.

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