Neogen Chemicals Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Neogen Chemicals Ltd (NEOGEN) Q4 FY22 Earnings Concall

Management Update:

• NEOGEN said FY22 has been the best year in its history with highest level of growth in revenues at 69% in 4Q22 and 45% in FY22.

Q&A Highlights:

• Anshul Verdia from Edelweiss asked that on the organic chemicals revenue, what led to the moderation QonQ of INR6 crore in terms of topline. Harin Kanani MD said the moderation was driven by product mix and mainly because NEOGEN was trying to develop some new molecules that was being done in the company for the first time.

• Ankur Periwal from Axis Capital asked about the exit run rate in terms of MPP utilization. Harin Kanani MD replied that NEOGEN’s utilizations are getting better between the two. However, NEOGEN has not yet reached full utilization levels.

• Rohit Nagraj from Emkay Global asked about lithium if there is resistance from the customer given the pricing is higher. Harin Kanani MD said that there might be some customers who will not be able to absorb this new prices of lithium, but most of the customers are right now appreciating that NEOGEN can supply lithium.

• Rohit Nagraj from Emkay Global enquired where NEOGEN is placed regarding the expectation of 20% revenue from CSM segment. Harin Kanani MD answered that in CSM the revenue growth continues to increase. NEOGEN is still hopeful that by FY24 advanced intermediates will contribute 40% and the CSM will contribute up to 20% revenue of that.

• Anirudh Shetty from Solidarity Investment asked about the capex plans for the electrolyte and the salts and additives business and the sales potential. Harin Kanani MD said the exact investment breakup cannot be shared. But said this will be basically done in the existing plant, where already the lithium plant is ready. In the existing block, NEOGEN is adding few more reactors. So, relatively the costs will be a bit lower.

• Anirudh Shetty from Solidarity Investment asked that as NEOGEN looks to do more sales from Dahej, what will be blended tax rate. Ketan Vyas CFO said that Dahej being tax free zone and NEOGEN having this tax depreciation also at higher rate but anticipate that the blended tax rate going forward should remain approx. about 19% or 20-25% on a broader range.