Neogen Chemicals - Battery Chemicals Execution Remains The Key: Nirmal Bang

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Nirmal Bang Report

Key Points

1. We recently interacted with the management of Neogen Chemicals Ltd. to understand better the synergies derived from BuLi acquisition and update on battery business.

2. Neogen Chemicals is aiming for ~30% market share in electrolyte segment in India by FY28. ‘China plus one' theme should aid growth in salts segment.

3. If executed well, earnings growth can be ~four times over FY23-FY27, in our view. Implied price-to-earning is ~20 times FY27E at current market price.

4. Near-term weakness in existing bromine business due to tepid demand in pharma and agrochemicals could offer better entry point.

5. Maintain 'Accumulate' with revised target price of Rs 1,800 (earlier Rs1,600), valued at 40 times PE on September 25E earnings.

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