Neogen Chemicals Boosts Q1 FY25 Profit to INR 11.5 Cr, Lithium Sales Shine

About the Stock

Neogen Chemicals Ltd, established in 1991, is a leading manufacturer of bromine and lithium-based organic and organo-metallic compounds essential for the pharmaceutical, agricultural chemicals, and engineering sectors. Neogen produces sophisticated intermediates for pharmaceuticals, agrochemicals, flavours, and fragrances. As the largest importer of Lithium Carbonate and Lithium Hydroxide for the past three decades, Neogen has cultivated robust relationships with global leading lithium miners and processors, solidifying its position in the market.

Performance Highlights – Q1 FY25

In Q1FY25, Neogen Chemicals Ltd. demonstrated moderate growth and enhanced profitability in its consolidated financial results. The company’s revenues grew by 9%YoY to INR 180 Cr, while EBITDA rose by 10% to INR 30.8 Cr. Neogen maintained a stable EBITDA margin, which increased slightly to 17.1%, representing a 10-basis points improvement compared to the previous year. Notably, the company’s Profit After Tax (PAT) for the quarter reached INR 11.5 Cr, marking a significant 18% increase year-over-year.

Strong revenue performance despite challenging operating scenario. Volume-led growth driven by higher contribution from non-agchem linked products amid weak pricings. A global recovery in agricultural chemicals is anticipated in the latter half of this fiscal year. Strong BuLi Chem performance driven by recovering demand for key application-specific products. Neogen Ionics enhanced revenue with Lithium Salt sales and limited Electrolyte testing. EBITDA improved despite increased employee costs and other expenses related to capacity expansion in Neogen Ionics. Operational efficiencies helped maintain margins at 17.1%, counteracting ongoing pricing pressures across key products. Net profit performance demonstrates robust operational trends, with an additional boost from reduced tax rates. However, as capital expenditure in Battery Chemicals accelerates, both depreciation and interest expenses are anticipated to increase.

Neogen Ionics (Battery Chemicals)

 Neogen Ionics secured financing for most of its capital expenditure, primarily through long-term project finance debt with a 10-year tenure and a grace period. Construction has begun on the new facility, with commercial production expected to start in FY26, aligning with India’s growing battery manufacturing capabilities.
 The company is negotiating long- term electrolyte force agreements with battery manufacturers.Two major producers are set to start operations this year, with several more expected to launch within the next one to two years.
 A dedicated team of 70-80 employees is focused on implementing the battery chemicals project while also managing ongoing production in the first phase.
 The US Inflation Reduction Act and Foreign Countries of Concern policies are expected to accelerate industry momentum. The company has initiated discussions, signed MOUs, and established pricing agreements with international customers.
 Battery chemicals account for approximately 35% of electric vehicle battery costs; advancements in this area are expected to contribute to reducing the overall price of EVs.

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