Neogen Chemicals Limited has reported a robust performance in Q2 FY25, showcasing a significant 20% year-over-year revenue growth, reaching ₹193 crore. Despite a tough pricing environment and softer demand in agrochemicals, Neogen has managed to navigate these challenges with increased volumes across its core segments and notable contributions from BuLi Chem, its recent acquisition. The company also registered a 38% jump in Profit After Tax (PAT) to ₹11 crore, driven by enhanced operational efficiencies and higher plant throughput.

Battery Chemicals Expansion Gains Momentum

Neogen Ionics, a division dedicated to battery materials, emerged as a key growth driver this quarter. The company began its initial commercial sales of lithium salts and electrolytes, receiving strong market reception and setting the stage for substantial growth in the coming year. This strategic shift reflects Neogen’s ambitions to establish a firm foothold in the battery chemicals sector, a move supported by ongoing greenfield developments in Dahej, where a large-scale facility using advanced MUIS technology is under construction. Management underscored that this development aligns with India’s rising battery capacity demand, ensuring Neogen is well-placed to capture future market opportunities.

Operational Highlights and Financial Performance

During Q2 FY25, Neogen reported an EBITDA increase of 33% to ₹35 crore, while maintaining a healthy margin of 17.9% despite the industry’s current pricing constraints. Chairman and Managing Director Haridas Kanani noted that the results underscore the company’s resilience and commitment to navigating volatile market conditions. He highlighted that while agrochemical demand remained soft, other segments such as battery chemicals witnessed positive momentum. Mr. Kanani further expressed optimism about a potential recovery in demand toward the latter part of FY25.

Expansion Initiatives in Battery Chemicals

The company’s focus on battery chemicals, branded under Neogen Ionics, has seen several milestones this quarter. Neogen announced that it has achieved financial closure for the majority of its capital expenditure dedicated to battery chemicals. Additionally, it has entered discussions with major battery manufacturers for long-term electrolyte supply contracts. With 200 MTPA of its 400 MTPA lithium electrolyte salts and additives capacity now operational, the company has begun shipping commercial trial batches to customers. The construction of a 2,000 MTPA electrolyte manufacturing facility at Dahej is also underway, with the first batch already reaching four customers.

Strategic Positioning and Future Outlook

Neogen’s strategic pivot toward the battery chemicals market comes at a time of rising demand for non-Chinese lithium salt supplies, as international compliance regulations and de-risking strategies become more prominent. The company has made substantial headway in securing a place in this emerging sector, particularly with its plans to expand its electrolyte production capabilities to meet growing domestic and international demand. Industry experts suggest that Neogen’s expertise in lithium chemistry and specialty chemicals, along with recent expansions, positions it favorably as a leading supplier in the energy storage and electric vehicle sectors.

Industry analysts commend Neogen Chemicals’ proactive approach in pivoting towards battery chemicals, a segment expected to experience exponential growth. According to a sector expert, Neogen’s established capabilities in specialty chemicals, particularly in lithium chemistry, give it a competitive edge. The expert emphasized that securing non-Chinese sources of lithium salts could enhance the company’s attractiveness in the global market, especially given current geopolitical concerns and the heightened focus on supply chain diversification. Neogen’s strategic hiring and increased capital allocation toward battery materials further solidify its growth outlook in the high-potential electric vehicle and energy storage markets.

  BuLi Chem, Dahej, Haridas Kanani, India, MUIS technology, Neogen Chemicals, Neogen Ionics, NSE