Broker's Call: Neogen Chemicals (Buy)

What happened

Neogen Chemicals reported second-quarter results weaker than estimates because of higher input and logistics costs. Management expects improvement as the Dahej plant restarts and organolithium grows, and it plans ₹45 crore of capital spending to double organolithium capacity to 600 mtpa.

Confirmed

Global impact / market context

The planned spending of ₹45 crore is meant to double organolithium capacity, which the company says could add ₹150–200 crore of yearly revenue at full use. That extra revenue would need to cover costs and lift profit; until then, higher costs weigh on results.

Analyst inference

Battery chemical sales are expected at about ₹250 crore in FY27 and over ₹1,000 crore in FY28. About 60 GWh of battery capacity is being built in India, with 27 GWh due in 2026. Neogen benefits only if those plants run near half capacity by FY29.

Analyst inference

What to watch

1. Watch whether the Dahej plant restarts as management expects, since it is named as a driver of a better outlook for the base business. Confirmed
2. Track battery chemical revenue against the roughly ₹250 crore FY27 and over ₹1,000 crore FY28 targets, since a shortfall would delay the expected lift. Analyst inference
3. Watch the ₹45 crore organolithium expansion to 600 mtpa, and whether it generates the stated ₹150–200 crore of yearly revenue at full use. Proposed

Evidence

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