Synopsis: A specialty chemicals maker started FY27 with strong revenue and profit growth, even as it works through a plant rebuild after last year’s fire incident. Behind the numbers, its battery materials business is beginning to attract serious attention from global customers, giving the company two separate growth stories to watch this year.
Specialty chemical companies rarely get to combine a recovery story and a new-technology story in the same quarter. This one has managed both, posting a strong topline while its newer battery materials arm inches closer to commercial supply deals with international customers, right as the industry pivots toward non-Chinese sourcing.
With a market capitalization of around Rs. 5,650 crore, the shares of Neogen Chemicals Limited were trading near Rs. 2,060 apiece, with the stock at a 52-week range of Rs. 967 to Rs. 2,374 and a P/E of approximately 169x.
A Strong Start to FY27
Consolidated revenue for the quarter rose 34% year-on-year to Rs. 250 crore, while EBITDA jumped 53% YoY to Rs. 48 crore, taking the EBITDA margin up by 260 basis points to 19.3%. Profit after tax grew 67% YoY to Rs. 17 crore, with the PAT margin improving to 6.8% from 5.5% a year earlier. On a standalone basis, revenue grew 37% YoY to Rs. 252 crore, and PAT rose 37% YoY to Rs. 19 crore.
Growth came despite the temporary shutdown of the Dahej plant following last year’s fire, with the company managing output through toll manufacturing arrangements in the interim. The Organolithium portfolio recorded its highest-ever quarterly revenue, and Neogen Ionics, the company’s battery materials arm, brought in Rs. 19 crore in revenue, up sharply from Rs. 5 crore a year earlier.
Interest costs, however, climbed 64% YoY to Rs. 20.8 crore, driven by higher debt drawn to fund ongoing capex, increased working capital needs amid geopolitical supply chain inflation, and delays in insurance receipts, moderating what would otherwise have been an even stronger bottom-line print.
Global Customers Line Up for Battery Materials
The company’s battery chemicals business is where the more interesting developments sit. It has secured provisional approvals from four major international customers and completed final site audits with three US-based electrolyte manufacturers, with commercial supplies expected once plant trials get final approval. This matters as global battery makers shift away from Chinese suppliers to stay eligible for incentives like the US tax credit tied to Foreign Entity of Concern rules, a transition expected to largely play out through 2026-27.
The company’s Rs. 1,795 crore battery materials project across its Dahej and Pakhajan sites remains on schedule, with Rs. 1,298 crore already spent, including Rs. 218 crore in Q1 alone. Of its planned 5,500 MT lithium electrolyte salt capacity, 200 MTPA is commissioned and shipping to customers, with the remaining capacity in trial production or slated for H2 FY27. Total planned electrolyte capacity stands at 32,000 MT, backed by promoter equity and a $20 million commitment from JV partner Morita.
Where the Growth Is Coming From
Domestic sales made up 70% of Q1 revenue, with exports, including deemed exports, accounting for the remaining 30%. The organic chemicals segment contributed Rs. 194 crore of consolidated revenue, up 18% YoY, while the newer Neogen Inorganics business added Rs. 57 crore, up a sharp 158% YoY.
The company also updated investors on its Dahej fire claim, with cumulative recoveries reaching Rs. 164 crore and a further Rs. 186 crore still receivable on a consolidated basis. Separately, the board approved raising up to Rs. 600 crore through a qualified institutional placement, subject to shareholder approval, to help fund its ongoing capex plans.
What Comes Next
Management has described FY27 as a defining year of execution, with the battery materials project expected to be commissioned and scaled up even as the core chemicals business returns to its normal growth trajectory once the replacement Dahej plant is fully operational. The company continues to point to strong policy tailwinds, including India’s PLI scheme for battery cells and a proposed scheme for battery components, as factors that could accelerate demand for its electrolyte and lithium salt capacities.
Conclusion:
None of this comes without risk. Interest costs have risen sharply on the back of higher debt and working capital needs, and the battery materials business is still pre-revenue in any meaningful sense despite the early customer approvals. That said, a quarter that shows both a recovering core business and tangible progress with global battery customers gives investors two separate reasons to keep watching this stock through the rest of FY27.
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