Neogen Chemicals reports strong Q3 FY25 growth as battery business expands

Neogen Chemicals Limited delivered a robust performance in Q3 FY25, reporting a 22% revenue surge, driven by volume growth in its specialty chemicals division and strategic expansion in its battery materials business. The company’s EBITDA rose 71%, while profit after tax skyrocketed by 844%, underlining the strength of its operations despite challenging market conditions.

What Drove Neogen Chemicals’ Q3 FY25 Revenue Growth?

Neogen Chemicals’ revenue for the quarter ended December 31, 2024, reached ₹201 crore, marking a 22% year-on-year increase. This growth was primarily attributed to higher volumes in the company’s core specialty chemicals business, bolstered by the integration of BuLi Chem. The expansion of its battery chemicals business, under Neogen Ionics, also played a crucial role in supporting revenue.

Neogen Ionics has begun lithium salt exports, adding a new revenue stream to its portfolio. The segment is positioned for significant expansion in the next financial year, with increased production capacities expected to drive long-term growth. Despite a challenging pricing environment across several product categories, Neogen Chemicals maintained operational resilience, ensuring continued profitability. The company’s ability to optimize costs and enhance efficiencies helped offset weaker pricing trends in raw materials.

How Did Neogen Chemicals Improve Profitability in Q3 FY25?

Neogen Chemicals recorded a 71% jump in EBITDA, reaching ₹34.6 crore for the quarter. The company attributed this growth to higher plant utilization, which improved cost efficiency, operational improvements, including streamlined production processes, and lower employee costs, contributing to overall margin expansion. Despite industry-wide pricing pressures, the company’s EBITDA margin remained strong at 17.2%, supported by its ability to achieve stable absolute EBITDA on a per-kilo basis. The battery chemicals segment also contributed to higher margins, as operational efficiencies kicked in following the commencement of export sales.

Meanwhile, Neogen Chemicals’ profit after tax (PAT) surged 844%, reaching ₹10 crore. This extraordinary growth was partly due to a favorable base effect, as the prior-year quarter had one-time expenses that impacted profitability.

What Is Driving Growth in Neogen Chemicals’ Battery Business?

Neogen Chemicals’ battery chemicals business under Neogen Ionics is emerging as a major growth driver. The company has made significant progress in its lithium salt production, marking the beginning of a strong revenue contribution from the battery segment.

The company has successfully launched its battery electrolyte salts production, with 200 MTPA already commissioned and an additional 200 MTPA in trial production. Additionally, Neogen Ionics has commenced trial supplies from its 2,000 MT electrolyte plant at Dahej, with four customers already receiving commercial samples.

Neogen Chemicals is strategically positioning itself as a key supplier for India‘s rapidly expanding battery manufacturing industry. A major ACC battery manufacturer has begun trial production, with several others expected to follow within the next two years. This creates significant demand for locally produced lithium salts and electrolytes, reinforcing Neogen’s long-term growth trajectory.

What Are Neogen Chemicals’ Future Expansion Plans?

Neogen Chemicals is advancing its ambitious ₹1,500 crore CAPEX plan, primarily focused on scaling up its battery materials production. Key updates on this expansion include full financial closure for the project, funded mainly through long-term project finance debt with a 10-year tenure. The company has deployed ₹419 crore so far, with significant progress on construction. Over 70% of erection and engineering work has been completed, ensuring the project remains on track for commercial production in FY26.

The company expects to fast-track plant installation once key equipment and machinery are shipped by H2 CY2025. The modular construction process has facilitated a streamlined approach to scaling up operations, further accelerating project execution. Additionally, Neogen Chemicals is in advanced discussions with battery manufacturers for long-term supply contracts, aiming to establish a strong foothold in the Indian lithium-ion battery supply chain.

How Does the BuLi Chem Merger Strengthen Neogen Chemicals?

In a significant strategic move, Neogen Chemicals completed the merger of BuLi Chem, effective January 31, 2025. This development is expected to streamline operations, reduce overall costs, and enhance efficiency. It will also strengthen Neogen Chemicals’ position in the pharmaceutical and agrochemical sectors and expand its lithium product offerings, further diversifying its specialty chemicals portfolio.

The company has also started exporting to key global markets, including the European Union, South Korea, and Japan, marking a major step in its international growth strategy.

What Is the Market Outlook for Neogen Chemicals?

Neogen Chemicals remains confident about achieving ₹950-1,000 crore in standalone revenue by FY26. Beyond this, the rapid scale-up of its battery chemicals business is expected to drive consolidated financial performance.

The company has strategically diversified into semiconductors, flavors & fragrances, and industrial custom synthesis manufacturing (CSM) to offset the slowdown in the agrochemicals market. This approach highlights its adaptability to changing market conditions and its ability to identify new revenue streams.

Neogen Chemicals’ credit rating remains strong, with CRISIL reaffirming its long-term rating at A/STABLE. This underscores the company’s financial health and ability to execute its ambitious growth strategy.

Neogen Chemicals’ Q3 FY25 results reinforce its strong market positioning and ability to navigate economic uncertainties. With expanding lithium salt production, higher battery materials demand, and a clear growth strategy, the company is well-positioned for sustained long-term success.

As India accelerates its transition to electric vehicles and energy storage, Neogen Chemicals’ battery chemicals business will play a crucial role in shaping the industry’s supply chain. Its continued focus on innovation, operational efficiency, and strategic expansion sets the stage for future revenue growth and enhanced profitability.