Neogen Chemicals Ltd. delivered subdued financial performance in the quarter. Lower lithium and bromine prices, higher financing and depreciation costs led to lower than expected profitability.
Revenue for organic chemicals segment grew by 24% YoY while the revenue for the inorganic chemicals segment declined by 21% YoY owing to lower prices of lithium raw material. Traction in the existing business remains below optimum levels.
However we are sanguine on the company’s progress on the battery chemical front with strong capex plans coupled with a top notch technology partner in the form of MU Ionic Solutions.
Neogen is seeing strong interest for their battery chemicals segment from domestic as well as overseas customers. We maintain our ‘Hold’ rating on the stock on account of rich valuations with target price of Rs 1,700.