India’s specialty chemicals market is rapidly growing, valued at approximately $32 billion in 2023. Key segments include agrochemicals, dyes, and personal care ingredients. The sector’s expansion is driven by increased demand from domestic industries and exports, making it a significant contributor to India’s chemical industry.
With a market capitalization of Rs 4,366.69 crore, On Friday’s early trade, the shares of Neogen Chemicals Ltd were trading at Rs 1,654.05 per share, decreasing around 0.47 percent as compared to the previous closing price.
Looking into the company’s financial performance, revenue decreased by 2 percent from Rs 204 crore in Q4FY23 to Rs 200 crore in Q4FY24. During the same period, net profit increased by 21 percent, from Rs 14 crore to Rs 17 crore.
IDBI Capital, one of the well-known brokerages in India, gave a ‘Buy’ call on the chemical stock with a target price of Rs 2,871 apiece, indicating a potential upside of 74 percent from Friday’s price of Rs 1,654.05 per share.
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Here’s the brokerage finding for this bullish upside target of 74%:
● Contracts with committed volumes from domestic battery manufacturers like Ola Electric, Rajesh Exports, Exide, and Amara Raja will boost the company’s stock price as per brokerage. Conservative estimates suggest 25% and 50% capacity utilization for battery chemicals in FY27 and FY28, respectively, driving healthy price appreciation.
● The lithium-ion battery market is estimated to exceed 200 GWh per year by FY30, owing to increased EV adoption and the use of energy storage systems. The local need for electrolytes is expected to reach over 210,000 tons. Neogen’s battery chemicals factory, set to open by the end of FY26, will provide a substantial competitive edge in this market.
● Neogen’s technological tie-up with MUIS will expedite electrolyte and lithium salt approvals with major battery manufacturers like Ola Electric and Exide. Brokerage expects robust growth in Neogen’s core business, driven by demand recovery in agrochemicals and pharma in FY25 after a slow FY24.
● IDBI Capital projects Neogen’s Revenue, EBITDA, and PAT to grow at CAGRs of 42%, 45%, and 58% respectively from FY24 to FY28, with ROE/ROCE increasing to 17.6%/13.5%. Working capital intensity will reduce due to the battery chemicals business.
● To balance capital structure and fund battery chemicals, Neogen plans a Rs 1.75 billion equity raise in FY26. IDBI Capital views Neogen as a compelling medium-term structural growth story, highlighting strong investment potential.
Neogen Chemicals Limited manufactures specialized chemicals for the pharmaceutical, engineering, and agrochemical sectors. The Company produces bromine and lithium-based chemical compounds, including organic and inorganic chemicals. It operates in two business segments: organic chemicals and inorganic chemicals.
Written by:- Abhishek Singh
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