SYNOPSIS: Revenue grew modestly in Q3 FY26, but profits declined sharply year-on-year due to higher finance and expansion costs. EBITDA margins contracted amid temporary headwinds, while capacity expansion and insurance recovery remain underway.
Shares of one of India’s leading manufacturers of Bromine-based and Lithium-based specialty chemicals surged over 10 percent on BSE, despite reporting mixed Q3 FY26 results with a net profit decline of 63 percent YoY, largely impacted by post-fire related costs, even as the company maintained a positive outlook for its lithium business.
With a market cap of Rs. 3,468.4 crores, shares of Neogen Chemicals Limited were trading in the green at Rs. 1,314.7 on BSE, up by around 1 percent, compared to its previous closing price of Rs. 1,302.15. The stock has delivered negative returns of over 32 percent in the last one year, but has gained around 8 percent in one month.
Financial Performance Q3 FY26
Neogen Chemicals Limited announced the financial results for the third quarter of FY26 on Wednesday after market hours, as per the latest regulatory filings with the stock exchanges.
For Q3 FY26, the company posted a consolidated revenue from operations of Rs. 220 crores, reflecting a sequential growth of more than 5 percent QoQ compared to Rs. 208.66 crores in Q2 FY26. Likewise, on a year-on-year basis, revenue increased by around 9 percent from Rs. 201.43 crores recorded in Q3 FY25. Revenue growth was driven by increased volumes in both organic and inorganic chemicals, supported by consistent demand.
Meanwhile, the net profit stood at Rs. 3.7 crore, indicating an increase of about 9 percent QoQ from Rs. 3.4 crores in Q2 FY26, while on a year-on-year basis, the profit moved down by nearly 63 percent from Rs. 10 crores reported in Q3 FY25. Profitability was impacted by higher finance costs linked to Dahej plant reconstruction and pre-operative and expansionary spends in Neogen Ionics.
Operating performance deteriorated during the quarter, with EBITDA falling to Rs. 32 crore, marking a decline of around 8 percent YoY from Rs. 34.6 crores in Q3 FY25, while EBITDA margins fell to 14.5 percent, reflecting a contraction of 270 bps YoY from 17.2 percent.
Sequentially, EBITDA remained relatively stable; however, YoY performance was affected by temporary cost pressures. These included higher overheads associated with the Battery Chemicals business under Neogen Ionics, increased insurance premiums following the fire incident, and interim toll manufacturing expenses. The company indicated that eligible losses are expected to be recovered through Loss of Profit insurance claims.
Key Updates
Regarding the fire incident, during 9M FY26, the company received Rs. 83.48 crore, including Rs. 80 crore as an on-account payment from the insurance company. As a result, the net claim receivable reduced to Rs. 251.12 crore. Construction of the replacement plant is progressing as planned, with commissioning targeted for Q1 FY27.
The Board has also granted in-principle approval to raise up to Rs. 150 crore via a preferential issue of equity shares to the Promoter Group, underscoring long-term commitment to the company’s growth plans.
Under its expansion initiatives in the Battery Chemicals business, the company had earlier announced a new capacity of 400 MTPA for manufacturing Lithium Electrolyte Salts and Additives. Out of this, 200 MTPA has already been commissioned, and the first approval material has been shipped to customers. Trial production is currently underway for the remaining 200 MTPA capacity. Additionally, 1,100 MT is scheduled to be commissioned by March 2026, followed by another 1,000 MT targeted for commissioning by Q1 FY27. Further, at its Dahej facility, the company has established a plant with a capacity to manufacture 2,000 MT of electrolyte, which has now been fully commissioned.
The company highlighted that demand for lithium-based chemicals typically strengthens in Q4, driven by the HVAC segment, where capex benefits from 100 percent depreciation incentives. Agrochemical demand is also seasonally stronger in H2 FY26, aligned with crop cycles. Further, European demand generally scales up from October-November and accelerates after the holiday season, resulting in historically stronger H2 performance for the company.
Neogen Chemicals Limited is one of India’s leading manufacturers of Bromine-based and Lithium-based specialty chemicals, with a product portfolio of over 258 products that comprise organic and inorganic chemicals. Its products are used in pharmaceutical and agrochemical intermediates, semiconductors, engineering fluids, electronic chemicals, polymer additives, water treatment, construction chemicals, aroma chemicals, flavours and fragrances, specialty polymers, and chemicals & vapour absorption chillers.
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