The shares of the chemical manufacturer, Neogen Chemicals jumped to a record high since its listing on May 8, 2019. On May 12, 2019, the stock price of the company soared more than 18% to ₹366.50 from its previous closing price of ₹308.14. The share price has rallied 69% to ₹363.20 as against the issue price of ₹215 per share.
Initial Public Offering of Neogen Chemicals
Neogen Chemicals IPO was available for subscription from 24-26 April’19 having a price band of Rs 212-215 per share. The company witnessed a good response by investors on their final day of subscription and was subscribed at 41.14 times. The promoters have a majority stake accounting to 70% and the remaining 30% lies in the hands of the public.
Neogen chemicals specialize in manufacturing of Bromine-based and Lithium-based speciality chemicals. Speciality chemicals are chemicals which impart multiple properties to a variety of products. The company also deals in Grignard Compounds.
Neogen chemicals have their operating facilities in Mahape (Navi Mumbai), Vadodara (Gujarat) along with proposed facilities in Dahej and Kharakhadi in Gujarat.
Future plans and growth expectations
Neogen Chemicals has assured ample of room for growth ahead and promised to deliver robust performance in upcoming fiscals. The company plans to boost their capacity, enhance its product portfolio backed with an efficient process.
The company expects the demand for bromine-based & lithium-based products to surge in upcoming quarters. The demand for products is expected to grow in India & abroad owing to the expansion of industries where they are being utilized. Neogen’s product portfolio can cater to industries like pharmaceuticals, refrigeration, flavours & fragrances, agro-chemicals, polymer syntheses, etc.
China is one of the leading players in speciality chemicals manufacturing constituting a significant portion in the global speciality chemicals market. However, due to the on-going environmental issues in the country, a decline has been witnessed in the output of speciality chemicals. The present scenario is an excellent opportunity for Neogen Chemicals to cater to global requirements by filling in the market gap which China has left behind.
Financial performance for FY19
The operational revenue during FY19 grew by 46% for a year-on-year basis to ₹239 crore against ₹164 crores in FY18. The surge in the revenue was witnessed on account of optimum capacity utilization, boost in the productivity at Vadodara plant & favourable product mix.
The company’s Ebitda margin has improved by 40 basis points to 18.2% from 17.8% in FY18.
Profit before tax of the company rose from ₹ 29 crores from ₹17.5 crores in the previous fiscal.
The profit nearly doubled amounting to ₹21 on account of robust operational performance. The company had reported a net profit of ₹11 crores in FY18.