Neogen Chemicals delivered exceptional Q1 FY2027 results, with consolidated revenue rising 34% year-over-year to ₹250 crores, driven by volume gains across core business verticals. The company's EBITDA climbed 53% to ₹48 crores with margins expanding 260 basis points to 19.3%, while profit after tax surged 67% to ₹17 crores. The strong performance was primarily attributed to Neogen Ionics' robust quarterly revenue of ₹19 crores, up from ₹5 crores in Q1FY26, which alone accounted for over 50% of the subsidiary's entire FY26 revenue. Management raised its standalone base-business revenue guidance for FY2027 to ₹950-1,050 crores from the previous ₹875-950 crores, with expectations to cross ₹1,000 crores in the current financial year.
The battery materials segment continues to be Neogen's key growth driver, with management projecting current capex could support ₹2.4-2.9 billion in revenue by FY2029, with a potential 50-50 split between battery chemicals and other chemicals. According to the Ministry of Heavy Industries, domestic battery demand is projected to surge from 33 GWh last year to 92 GWh by 2027, eventually reaching over 200 GWh by 2032. Management indicated that current capacity is fully designed for around 40 GWh of salts and 30 GWh of electrolyte, with plans to achieve ₹2,500-3,000 crores in revenue over the next two and a half years. The company has secured provisional approvals from four international customers for lithium electrolyte salts and expects commercial supplies to commence post final plant trial approvals with global cell producers accelerating their transition towards non-FEOC, non-PAP compliant supply chains.
Neogen's major expansion projects remain on schedule with significant progress across multiple facilities. The Dahej replacement plant trial runs are underway with commercial production expected in Q2 FY2027, while electrolyte commissioning at Neogen Ionics is targeted for H1 FY2027 and lithium electrolyte salts commissioning for H2 FY2027. The company's ₹1,795 crore capacity expansion across two key sites continues with ₹1,298 crore cumulatively incurred to date, targeting total manufacturing capacity of 32,000 MT for Electrolytes and 5,500 MT for Lithium Electrolyte Salts by FY27. Management emphasized that FY2027 represents a strategic turning point as CapEx transitions into revenue generating assets, with the rebuilt Dahej Plant coming back online and Neogen Ionics scaling rapidly.
The company has approved a ₹600 crore QIP to support long-term capital requirements and deleverage the balance sheet, with peak net debt expected to be below ₹1.5 billion after the QIP versus about ₹1.8 billion before. Management expects free cash flow to turn positive by FY2029 driven by a more mature battery business and better mix in base chemical operations. For FY2028, the company guided to ₹1,100-1,200 crores in base-business revenue, implying 10-15% growth, with focus on product mix, larger volume molecules, margin improvement and working capital efficiency. The company maintains its strategic position as a trusted non-FEOC partner with established technology partnerships, noting that internationally, there is no dependency on China for Neogen in terms of technology through partnerships with Japanese companies Mitsubishi and Morita.
All three companies operate at different segments of India's battery value chain but are investing ahead of demand growth. According to the analysis, Neogen Chemicals trades at a premium with P/E multiple of 160.0x vs industry median of 102.3x, while HEG and Himadri trade at discounts to industry but premiums to historical medians. Himadri stands out for its strong return ratios with ROCE of 22.1% and ROE of 54.7%, while HEG and Neogen show weaker return ratios. The ability of these companies to convert ongoing investments into commercial production over the next few years will determine their positioning in India's rapidly expanding battery ecosystem, with Neogen's technology base and established partnerships providing competitive advantages in the global market.
