Neogen Chemicals shares gain 4% on raising standalone biz revenue guidance after Q2 results

Driven by expanding production capacity and seasonal momentum, Neogen Chemicals Ltd.

has raised its revenue outlook for the standalone legacy business. The specialty chemical producer now targets ₹1,100+ crore in FY27 revenue, up from its earlier guidance of ₹950 crore – ₹1,050 crore, as new capacity at its Dahej facility comes online and a historically stronger second half of the fiscal year approaches.

The stock, in response, gained as much as 2.5% in early trading on Tuesday.

To support its medium-term growth strategy, Neogen announced a major brownfield expansion at its Patancheru unit in Telangana. The company will double its manufacturing capacity for Organo-Lithium chemicals from 300 MTPA to 600 MTPA of active material. The proposed capital expenditure of ₹45 crore will be funded through a mix of internal accruals and debt.

The Organo-Lithium expansion is expected to be completed by 1HFY28, contributing approximately ₹50 crore – ₹75 crore in revenue during FY28.

Neogen is actively working to streamline its balance sheet as well. For the base business, the management aims to reduce the working capital cycle to 180 days by the end of FY27, further improving it to 140–160 days in FY28 and 110–140 days in subsequent years. For its advanced battery materials venture, Neogen Ionics, the company is targeting a 90-day working capital cycle once optimal capacity utilization is reached.

For the September quarter, Neogen Chemicals reported 42% revenue growth to ₹296 crore, from ₹209 crore during the same quarter last year.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) during the quarter increased by 51% from last year to ₹45 crore from ₹30 crore earlier. Net profit also more than doubled in value from last year, while margins expanded by nearly 100 basis points to 15.3% from 14.4% earlier.

13 analysts have coverage on Neogen Chemicals, with 10 of them having a "buy" recommendation, one says "hold", and two have a "sell" rating on the stock. The consensus estimate of price targets implies an upside potential of 21.3% from current levels.

Antique Stock Broking has the highest price target on Neogen at ₹3,050, while Asian Markets Securities, at ₹1,455, has the lowest target.

Shares of Neogen Chemicals are trading 3.6% higher on Tuesday at ₹2,171.2. The stock has now extended its gains to 85% so far this year.