Specialty chemicals firm Neogen Chemicals reaffirms FY25 guidance after Dahej plant fire and payout

Neogen Chemicals Limited (NSE: NEOGEN, BSE: 542665) has received a ₹50 crore on-account insurance payout after a fire at its Dahej SEZ facility on March 5, 2025. The specialty chemicals manufacturer confirmed that it has not revised its revenue guidance for the financial year, despite plant-level disruptions. Reconstruction is expected to take 9–12 months, while critical production has been shifted to alternate locations.

How much damage did Neogen Chemicals incur from the March 2025 Dahej fire and how is it reflected in financial disclosures?

On June 27, 2025, Neogen Chemicals Limited disclosed that it had received an interim insurance payout of ₹50 crore as compensation for losses suffered in the fire incident at its Multi-Purpose Plant (MPP3), warehouse, and tank farms at Dahej SEZ, Gujarat. The fire occurred in the early hours of March 5, 2025, and led to extensive damage across the facility.

The Indian specialty chemicals manufacturer has quantified the standalone loss at ₹348.16 crore and consolidated loss at ₹362.90 crore. These figures include asset damage, inventory loss, and estimated incidental charges. The recognized insurance claim receivable stands at ₹334.60 crore on a standalone basis and ₹348.82 crore on a consolidated basis, indicating that the coverage is largely sufficient to offset direct damage costs. Net loss after adjustments has been accounted at ₹13.56 crore standalone and ₹14.08 crore consolidated.

Crucially, Neogen Chemicals has not yet accounted for insurance claims related to business interruption or asset reinstatement beyond written-down values, adhering to conservative financial disclosure principles.

What insurance settlement has Neogen Chemicals received and what is the timeline for full compensation?

The ₹50 crore received on June 27 is categorized as an “on-account payment” based on the interim recommendation from insurance surveyors. It represents an initial step in a multi-stage claim settlement process. The remaining compensation for damage to fixed assets, business interruption loss, and reinstatement costs will be assessed in further phases, subject to surveyor evaluations and policy conditions.

Institutional investors appear to be taking a measured view of this payout, noting that the quantum aligns with the high-value claims Neogen Chemicals has made, and signals good faith progress from the insurer. The insurance process is expected to extend over the next two quarters, given the complex valuation and replacement dynamics involved in a chemical manufacturing plant.

How is Neogen Chemicals mitigating production disruptions following the shutdown of its Dahej SEZ facilities?

Neogen Chemicals Limited has confirmed that operations at the affected MPP3 plant, warehouse, and tank farms remain temporarily suspended. According to the company’s statement, full reconstruction is estimated to take approximately 9 to 12 months, and preliminary work has already commenced.

To ensure business continuity, Neogen Chemicals has shifted production of critical specialty chemical products to other manufacturing units with customer consent. In addition, capacity from the ongoing expansion at its Patancheru facility is being leveraged to absorb some of the production volume. This plant, located in Telangana, is now expected to play a strategic role in Neogen Chemicals’ short-term operational continuity.

Institutional sentiment suggests that this flexibility in shifting production and customer alignment is a key factor supporting management’s ability to retain revenue guidance for FY25.

Why has Neogen Chemicals maintained its FY25 revenue guidance despite the fire-related disruption?

In its latest regulatory filing, Neogen Chemicals reiterated that there is no change in the revenue guidance it issued on March 7, 2025, following the incident. This reiteration comes even as the core Dahej SEZ site remains non-operational and reconstruction work is underway.

Management’s confidence stems from its proactive mitigation efforts: timely production relocation, leveraging additional capacity at Patancheru, and securing interim insurance relief. These actions collectively provide a cushion against operational volatility. Moreover, the specialty chemicals product mix being transferred includes high-margin segments with stable demand visibility, further aiding earnings predictability.

Institutional investors tracking the Indian specialty chemicals sector have noted that while gross margins may face short-term pressure due to logistical adjustments and under-absorption of fixed costs, the medium-term trajectory remains intact if recovery timelines are met as planned.

What does recent stock performance and valuation suggest about investor confidence in Neogen Chemicals?

On June 27, 2025, shares of Neogen Chemicals closed at ₹1,622.10, down 0.63% from the previous close. The stock recorded an intraday low of ₹1,611.40 and a high of ₹1,650.50. While the day’s movement reflects mild profit-booking or event-driven caution, the broader investor sentiment has remained stable since the initial fire disclosure in March.

The specialty chemicals manufacturer currently trades at an adjusted price-to-earnings (P/E) ratio of 203.96, reflecting its high-growth valuation premium. The total market capitalization stands at ₹4,279 crore, with a free float capitalization of ₹2,030 crore. Daily traded volume on June 27 was approximately 0.29 lakh shares, translating to a trade value of ₹4.65 crore.

This valuation, despite the setback at a major site, signals that institutional and long-term investors view the disruption as a manageable risk rather than a structural issue. Analysts suggest that the real test will be timely reinstatement of the Dahej facility and sustained client servicing without further margin compression.

What are the next strategic priorities for Neogen Chemicals as it recovers from the Dahej fire?

Going forward, Neogen Chemicals is expected to focus on three operational pillars: full reinstatement of the Dahej SEZ facilities within 9–12 months, continuous customer engagement to support production migration, and strategic utilization of capacity at other locations such as Patancheru.

Additionally, the specialty chemicals manufacturer will continue to engage with insurers and surveyors for the next phases of claim assessment, particularly for business interruption compensation and asset reinstatement. Management is likely to provide updated disclosures as and when further payments are received.

Institutional investors will also watch for commentary in the Q1 FY26 earnings report to evaluate whether there has been any material deviation in gross margin or EBITDA guidance due to elevated interim logistics and manufacturing costs.

While the event has caused short-term disruption, Neogen Chemicals’ rapid response, insurance coverage, and operational redundancy offer a blueprint for industrial resilience in the specialty chemicals sector.

Is Neogen Chemicals positioned for a steady rebound despite the fire-related challenges?

The fire at Dahej SEZ represented a significant operational challenge for Neogen Chemicals, but the company’s strategic decisions and financial prudence have enabled a partial derisking of the event’s impact. The interim insurance payout of ₹50 crore signals confidence in future claims, while the steady pace of recovery actions—ranging from customer-approved production shifts to parallel plant utilization—demonstrate managerial agility.

Given the insurance coverage in place, the conservative accounting approach, and the confirmed continuation of revenue guidance, Neogen Chemicals remains structurally well-positioned. If the reinstatement timeline holds and cost management remains disciplined, the incident may ultimately reinforce the company’s long-term credibility rather than diminish it.

Investors and analysts will now shift their focus to execution milestones over the next two quarters as the specialty chemicals manufacturer navigates the remainder of FY25 with caution but controlled optimism.