Neogen Chemicals Ltd (NEOGEN) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, please stay connected. The conference call will begin in the next few minutes. Thank you. Ladies and gentlemen, you are connected for the Neogen Chemicals earnings conference call. Please stay connected, the call will begin shortly. Thank you. Ladies and gentlemen, good day and welcome to the Neogen Chemicals Q2 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star followed by zero on your touchtone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Nishid Solanki from CDR India. Thank you and over to you.
Nishid Solanki (CDR India): Thank you. Good evening, everyone, and a warm welcome to Neogen Chemicals Q2 FY20
Nishid Solanki (CDR India): Earnings Conference Call. Joining us today from the senior management team are Mr. Anurag Surana, Non-Executive Chairman, Dr. Harin Kanani, Managing Director, and Mr. Gopi Krishna Sarathy, Chief Financial Officer. We will begin the call with opening remarks from the management team, followed by an interactive question and answer session. Before we begin, a standard disclaimer: certain statements made during today's call may be forward-looking in nature. Actual results may vary from these forward-looking statements. And a detailed disclaimer is available in our Q2 FY27 earnings presentation, which has been uploaded on stock exchange websites. With that, I would now like to invite Dr. Harin Kanani to share his opening remarks. Thank you and over to you, sir.
Harin Kanani (Neogen Chemicals Ltd): Good evening, everyone. And thank you for joining us to discuss our Q2 and H1 FY27 financial performance and business outlook. I hope you had an opportunity to review our investor presentation. I will begin with key performance highlights and strategic development during the quarter along with progress on our growth initiatives. Following this, our CFO, Mr. Gopi Sarathy, will cover the financial highlights. To commence, I am pleased to report that we delivered a robust all-round performance during the quarter, with consolidated revenue increasing by 42% year-on-year to INR 296 crore and EBITDA improving by 51% year-on-year to INR 45 crore. Our standalone profitability is even better, as consolidated performance reflects initial fixed cost absorption at Neogen Ionics, while revenue scale-up and capacity utilization continue to ramp up. Overall performance highlights the operational agility, inherent strength, and flexibility of our business model, and we swiftly pivoted towards application with better demand, visibility, and higher volumes. This momentum was further reinforced by an accelerated ramp-up in our battery chemical business with Q2 FY27 revenue reaching INR 37 crore compared to INR 5 crore in the same quarter in FY26. This was in line with our business plan, and we expect substantial scale-up in Q3 and Q4 and beyond, supported by the upcoming ACC battery manufacturing ecosystem being built in India, along with the rapid shift by US electrolyte manufacturer towards sourcing from non-FEOC suppliers in India. Importantly, this performance came on the back of a complex macro environment marked by Middle East geopolitical conflict and supply chain friction, feedstock cost inflation, and temporary overheads from our Dahej facility rebuild. I will move to key highlights and progress across our strategic growth initiatives. Expansion of organolithium capacity at Pataancheru: anchored by sustained volume improvement and expanding footprint of organolithium into high-growth, emerging applications, our Board has approved the expansion of manufacturing facility at Patancheru, Telangana. Under this, we will be doubling our organolithium capacity from 300 metric tons per annum to 600 metric tons per annum, with an estimated capex capital outlay of up to INR 45 crores. This strategic expansion is expected to unlock an additional revenue potential of 150 to 200 crores, depending on prevailing lithium prices, further strengthening our leadership position in specialized lithium chemistries. I would also now like to talk about successful fund raise via our maiden QIP. A major strategic landmark during the quarter was the successful completion of our maiden Qualified Institutional Placement, QIP, raising INR raising Rs. 600 crores. Demonstrating strong institutional faith in our business, the QIP was oversubscribed 6.5 times with broad-based participation from leading global and domestic investors. The resounding vote of confidence significantly strengthens our capital structure. We are deploying this proceeds strategically to deleverage our balance sheet, as we prepare to fund our next phase of growth in the future. Insurance claim status: Regarding the insurance claims, cumulative recoveries to date stand at Rs. 164 crore, comprising 155 crores in on-account payment and including 15 crore tranche received in July 2026, and 9 crore from salvage realization. Further, on October 29, 2026, the company accepted an additional claim amount of Rs. 152 crore from the insurance, which will be released in due course. With this, our with this, our total on-account claims received and receivable now stands at 315 crore,
Harin Kanani (Neogen Chemicals Ltd): inclusive of accepted claims and scrap sales till date. Consequently, majority of our recognized claim amount has now been secured, and discussions with the insurance for the remaining balance are progressing constructively, and we expect further settlements as the final assessments conclude. On the operational front, I am pleased to update that the trial runs of the rebuilt Dahej plant are currently underway, and we expect full to commence commercial production shortly within this current financial year, so that next quarter we'll have we'll be able to fully utilize this facility. We would also like to update on the credit rating. Our credit rating was upgraded, reflecting our strengthening balance sheet and improved financial flexibility. CRISIL rating has revised the outlook of Neogen's long-term bank facility of CRISIL A- stable from negative, while reaffirming the short-term rating at CRISIL A2+. This positive rating action underscores the enhanced capital structure resulting from our successful fund raise, ongoing operational ramp-up, and strong balance sheet discipline. Moving to battery chemicals, we are transitioning from capital investment into execution and scale-up phase. Our project mechanical completion timelines remain on track for both electrolyte and electrolyte salts. For electrolytes, mechanical assembly is complete. Trial runs have begun alongside stability validation and active joint trials of recipes with multiple gigafactories. Simultaneously, for lithium electrolyte salts, we have secured provisional approvals at our Dahej facility from five major international customers, completed final site audits for three US-based manufacturers, and already commenced commercial supply with two customers, two international customers. Further, Neogen Ionics Limited has executed a business transfer agreement to consolidate the lithium-ion electrolyte salt in LiPF6 solid LiPF6 undertaking our undertaking under our step-down subsidiary, Neogen Morita New Materials Limited, NML for short, for a cash consideration of 245 crores on a going concern basis, which also includes 77 crore already infused by Morita through preference allotment recently. Going forward, both our standalone operations and the battery chemicals segment are well positioned for an exciting phase of growth that aligns with India's goal of self-reliance in advanced energy storage and materials. Backed by a strong balance sheet and a disciplined execution strategy, we remain fully on track to meet our consolidated annual guidance as we continue creating long-term value and sustainable growth for our stakeholders. That concludes my initial remarks, and I will now hand over the call to our CFO, Mr. Gopi Krishna Sarthi to take you through the key financial performance.
Gopi Krishna Sarathy (Neogen Chemicals Ltd): Thank you, Dr. Kanani. Good evening, everyone. I will now walk you through the consolidated financial performance for Q2 FY '27. All comparisons are on year-on-year basis, unless specified otherwise. Revenue grew by 42% to 296 crores, fueled by consistent volume expansion across core segments, strong growth in organolithium and rapid scaling of Neogen Ionics also helped it. We saw revenue at Neogen Ionics was at 37 crores versus 5 crores in last quarter last year. And this is equal to the full year sales which we did in last year. Across our base vertical, organic chemicals generated revenue of 238 crores, reflecting 29% growth, while inorganic chemical segment delivered 140% growth at Rs. 58 crores. Consolidated EBITDA grew by 51% to 45 crores, while standalone EBITDA str delivered strong 54% growth to 54 crores with a margin of 18.6%. Consolidated EBITDA reflected the initial fixed cost absorption at Neogen Ionics as the capacity are yet to ramp up, alongside the temporary expenses related to Dahej rebuild, interim tolling arrangement, and elevated input costs. As the capacity utilization scales up at NIL, the operating leverage will improve significantly. Consolidated PAT grew 144% to 8 crores, while standalone PAT surged 127% to 21 crores. PAT performance reflects the strong operational momentum, though temporarily impacted by higher interest and depreciation charges tied to ongoing CapEx initiatives. Interest costs are expected to trend downwards moving ahead, supported by term debt reduction using the QIP proceeds, lower borrowing costs for
Gopi Krishna Sarathy (Neogen Chemicals Ltd): credit rating upgrade and incoming insurance claim disbursement. As of September 30, 2026, we maintained a strong liquidity profile of 465 crore in liquid investment and fixed deposits, which brings our consolidated net debt to 1,095 crore while stand alone net debt stood at 378 crores. With an optimized capital structure, improved credit profile, and revenue-generating assets scaling rapidly across both core specialty chemicals and battery materials, Neogen is well positioned for a sustainable and profitable growth. That concludes my remarks. I will now request the moderator to open the floor for Q&A session.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take a first question from the line of Nilesh Ghughe from HDFC Securities. Please go ahead.
Nilesh Ghughe (HDFC Securities): Yeah. Thanks. Am I audible?
Moderator: Your volume is very low, Nilesh. Can you use your handset mode?
Nilesh Ghughe (HDFC Securities): Yeah. Am I audible now?
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