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IDBI Capital Report
Neogen Chemicals Ltd. seem to be optically trading at very high valuations, however one needs to seriously consider the long runway the stock has to capture in the EV segment.
We are of the firm view that Neogen Chemicals will be able to capture a sizeable market share 30% of the EV electrolytes market since it will have a robust first mover advantage strengthened by its technological tie up with Mitsubishi Ionic Solutions.
We believe the company can clock in revenue CAGR of 17% from FY24-FY28E in its base business along with strong growth emanating from battery chemicals business.
We introduce FY27 and FY28 estimates factoring in growth from the battery chemicals business and upgrade our rating to Buy (from Hold) with a two year target price of Rs 2,871(35 times FY28 expected earnings).
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