Neogen Chemicals reported a 9% revenue growth in Q3 FY26, with gross profit up 13% and margin expansion, despite transient costs from the Neogen Ionics ramp-up and the Dahej fire recovery. Key focus remains on the strategic Indo-Japan JV for LiPF6 salt production and the Pakhajan greenfield project, targeting commercial production commencement in H1 FY27 and H2 FY27, respectively. Management is confident in achieving the INR 400-500 crore battery chemicals revenue target for FY27.
Q3 FY26 Performance Summary
Neogen Chemicals announced its Q3 FY26 results, marking a period of steady recovery and a decisive pivot toward a future-ready portfolio. Consolidated revenue reached INR 220 crore, showing a 9% year-on-year growth. Gross profit increased by 13% with an expansion of around 150 basis points in margin.
Segment-wise, organic chemical revenue was INR 187 crore (6% YoY growth), while the inorganic chemical segment showed stronger momentum at INR 33 crore (35% YoY growth). Neogen Ionics contributed INR 12 crore to the quarter’s revenue.
EBITDA for the quarter stood at INR 32 crore. Profit After Tax (PAT) was reported at INR 4 crore. The EBITDA performance was pressured by short-term factors including ramp-up costs for Neogen Ionics, interim toll manufacturing expenses, and higher finance costs related to the Dahej reconstruction.
Recovery and Dahej Plant Update
Regarding the fire incident, the company has received INR 83.48 crore in insurance claims across nine months of FY26, leaving a net claim receivable of INR 251.12 crore. Construction of the replacement Dahej plant is progressing rapidly, with commissioning on track for Q1 FY27.
Management noted that short-term cost pressures from transitionary phases will be balanced by insurance claim recoveries.
Strategic Battery Material Expansion
Indo-Japan Alliance for Electrolyte Salt
Neogen has finalized a joint venture with Japan’s Morita Investment Limited to produce and sell LiPF6 salt globally. Neogen will hold an 80% majority stake in the new entity, Neogen Morita New Materials Limited, supported by a $20 million investment from Morita for the remaining stake. This JV integrates proven Japanese technology, positioning it as India’s only non-FEOC compliant electrolyte salt plant offering an alternative to the Chinese supply chain.
Pakhajan Greenfield Project
The Pakhajan greenfield project is on schedule. Commercial production for electrolyte is targeted for H1 FY27, and electrolyte salts for H2 FY27. The facility has achieved a major milestone by securing long-term commercial supply approval from a prominent giga-scale Indian manufacturer following successful PPAP completion. Provisional approval for lithium electrolyte salts has also been received from multiple global clients, with final site audits expected in Q1 FY27.
Upon commissioning, Neogen Ionics is expected to diversify revenue streams and enhance the margin profile. Management is confident in capturing substantial market share as the EV ecosystem evolves.
Q&A Highlights: Working Capital and Funding
Management addressed working capital trends, noting that the increase in receivables aligns with business growth. Inventory is being built up temporarily to manage the transition before the Dahej plant starts internal production in Q1 FY27. The target is to stabilize inventory levels at 140 to 160 days by the end of the next financial year.
Current debt stands at approximately INR 680 crore (standalone) and INR 1,175 crore (consolidated).
Regarding external funding, the Board has granted approval for a preferential issue of equity shares to the Promoter Group to raise up to INR 150 crore. Additionally, the $20 million from Morita (expected by Q1 2026) and an expected insurance payout of INR 60 crore this week (with the main stock claim of INR 150-170 crore expected before end of March 2026) are anticipated capital inflows.
Forward Guidance and Market Outlook
Guidance for FY27 battery chemicals revenue remains unchanged at INR 400 to INR 500 crore, based primarily on the Dahej electrolyte sales starting from Q2 onwards. Q4 sales from Pakhajan salt are being kept as a backup against potential slips.
For FY29 projections, the salt business outlook depends on internal consumption versus international market development, with current salt capacity requiring expansion by FY28 to meet demand.
For the base business (CDMO and advanced intermediates), the company expects growth, aiming for a run rate of INR 950 crore next fiscal year, with margin improvements expected as toll manufacturing shifts back in-house post-Dahej stabilization.
In terms of future utilization ceiling, salt capacity is targeted at 80%, while the electrolyte formulation plant could potentially reach up to 100% utilization.
Source: BSE
