Neogen Chemicals Limited (NSE: NEOGEN) the specialty chemical manufacturer navigates post-fire operational challenges while advancing battery materials expansion. Performance impacted by higher finance costs and increased insurance premiums following the Dahej facility incident.
The company reported consolidated revenue of ₹220 crore for the third quarter ended December 31, 2025, representing a 9% increase compared to the same period the previous year. While top-line growth was sustained through increased volumes in Organic and Inorganic Chemicals, net profit was pressured by higher finance costs and temporary overheads related to the reconstruction of the Dahej plant and the expansion of the company’s battery chemicals division.
Financial Performance
The consolidated financial results for Q3 FY26 reflect steady revenue growth but significant margin compression due to transitory costs.
- Revenue: Consolidated revenue rose to ₹220.02 crore from ₹201.43 crore in Q3 FY25.
- EBITDA: Consolidated EBITDA stood at ₹31.9 crore, down 8% from ₹34.6 crore in the corresponding quarter last year. EBITDA margins contracted to 14.5% from 17.2% YoY.
- Net Income: Profit after tax (PAT) fell 63% YoY to ₹3.69 crore. Profitability was impacted by elevated insurance premiums and interim toll manufacturing expenses.
- Earnings Per Share (EPS): Consolidated EPS for the quarter was ₹1.40, down from ₹3.80 in Q3 FY25.
- Expenses and Finance Costs: Cost of materials consumed increased to ₹191.94 crore. Finance costs rose 60% YoY to ₹21.51 crore, driven by Dahej plant reconstruction and expansionary spending in NIL.
- Balance Sheet: Consolidated net worth was recorded at ₹793.12 crore. The Debt Equity ratio stood at 1.55 times. The company has received ₹83.48 crore in insurance payments for the fire incident to date, with a net claim receivable of ₹251.12 crore remaining.
Product Highlights
Neogen is strategically pivoting toward the battery materials sector through its subsidiary, Neogen Ionics Limited (NIL).
- Neogen Ionics (NIL): The division reported Q3 FY26 revenue of ₹12 crore.
- Expansion Projects: The Greenfield Pakhajan project is nearing mechanical completion, with commercial production of electrolytes and electrolyte salts targeted for H1 FY27 and H2 FY27, respectively.
- Customer Approvals: The company has successfully completed Production Part Approval Process (PPAP) requirements and secured long-term commercial supply approval from a giga-scale Indian customer for electrolytes.
Fire Aftermath
Insurance recovery from the March 5, 2025 fire at Neogen Chemicals’ Dahej SEZ plant remains a key financial overhang, with a large portion of the assessed claim still pending.
For FY25, the company recognised a consolidated loss of ₹362.9 crore (₹348.2 crore standalone) on damaged assets, inventory and related costs. Based on surveyor assessments, it recorded an insurance receivable of ₹348.8 crore (₹334.6 crore standalone), resulting in a net exceptional charge of ₹14.1 crore.
As of December 31, 2025, Neogen had received ₹83.48 crore, including ₹80 crore in on-account insurer payments and ₹3.48 crore from scrap sales, leaving a net receivable of ₹251.12 crore. Coverage includes reinstatement of assets, inventory and business-interruption losses, though claims for loss of profit and excess reinstatement value have not yet been recognised under conservative accounting. Recoveries under the loss-of-profit policy are expected in FY27.
Management expects finance costs, elevated due to reconstruction and bridge funding, to ease once the full payout is received. The insurer’s assessment is ongoing, while construction of the replacement plant is progressing, with commissioning targeted for Q1 FY27.
Rebuild Efforts
The current reporting period is primarily shaped by recovery and reconstruction efforts following the March 2025 fire at the Dahej SEZ plant. To offset capacity constraints arising from the incident, the company has deployed toll manufacturing arrangements to sustain operating volumes. Separately, the Board has granted in-principle approval to raise up to ₹150 crore via a preferential equity issue to the promoter group, aimed at supporting ongoing growth and funding requirements.
Business Outlook & Strategy
Management’s stated strategy involves stabilizing core operations in Pharma and Fragrance applications while positioning the company as a leading technology-led supplier in the battery chemicals value chain. Commissioning of the replacement plant at Dahej is scheduled for Q1 FY27. Neogen anticipates that bulk consignments of lithium salts will begin in H1 FY27 as large-scale customers finalize approvals.
Market Tailwinds
The company’s outlook is aligned with the broader expansion of India’s battery materials ecosystem, as several gigawatt-scale capacities are expected to come onstream over the next few years. Neogen is positioning to benefit from structural tailwinds, including U.S. tax-credit eligibility linked to non-FEOC sourcing requirements and ongoing price volatility in China’s lithium salt market, as it seeks to expand its global presence.
Investment Thesis: Bull vs. Bear
Bull Case
- High Historical Growth: Neogen has maintained a 21% revenue CAGR between FY20 and FY25.
- Strategic Expansion: Entry into the high-barrier battery chemicals sector with secured long-term supply approvals from major Indian customers.
- Promoter Support: The planned ₹150 crore equity infusion by the Promoter Group signals strong internal commitment to the growth strategy.
- Future Recoveries: Profitability is expected to improve in FY27 as “Loss of Profit” insurance claims are recovered and interest costs normalize following full insurance payouts.
Bear Case
- Margin Contraction: Profit margins have dropped to 1.7%, down from 5.0% YoY, reflecting high operational sensitivity to transitory costs.
- Leverage Concerns: The Debt Equity ratio has increased to 1.55x, and finance costs continue to rise significantly ahead of new capacity commissioning.
- Operational Risk: Core capacity at Dahej remains unavailable until Q1 FY27, leaving the company reliant on external toll manufacturing.
- Delayed Battery Payoff: The transformative impact of the Battery Materials division is not expected to yield bulk consignments until H1 FY27.