NEOGEN CHEMICALS

Pole player in speciality chem

Neogen Chemicals is a leading manufacturer of speciality chemicals based on bromine and lithium. Starting in 1991 at Mhape in Navi Mumbai with the manufacture of a few bromine and lithium compounds, the company has during the last three decades expanded its range of products to around 200 today, comprising 182 organic and 19 inorganic chemicals. In addition, the company also undertakes custom synthesis and contract manufacturing of speciality chemicals. Its prospects going ahead are exciting.

Consider:

• z Neogen is a leading speciality chemicals company and this industry segment is offering multifold returns to investors. Share prices of almost all speciality companies are at sky-high levels and prospects for this segment are highly promising. Till a couple of years ago, China was the uncrowned king in supplying speciality chemicals to global consumers. But on account of a stiff environmental-friendly policy of the Beijing government, there has been a sharp fall in production by Chinese companies. At the same time, global chemical players have felt the need to diversify the sources of imports and have started adopting a ‘China plus one’ policy to meet their requirements. India, thanks to its excellent quality of products and manufacturing competitiveness, has emerged as a leading alternative supplier of speciality chemicals to global consumers. According to experts, the unprecedented boom in speciality chemicals will continue unabated till at least 2027. In short, the outlook for Neogen is bullish at present.
• z The company operates from two modern manufacturing facilities — at Mhape in Navi Mumbai of Maharashtra and at Karhadi in Vadodara of Gujarat. Neogen has set up a third greenfield manufacturing facility at Dahej in Gujarat, which has recently gone on stream. At the same time, the company has also embarked upon an expansion plan for the Vadodara plant. These additional capacities will give a big boost to the company’s topline as well as bottomline at a time when the demand for its products is steadily on the rise.
• z Three decades ago, the company had started with 4 to 5 products, which went up to 20 products by 2001, and the current product portfolio is around 200. At the same time, the company’s customer base is also on the rise and has by now reached to 1,363, of which about 1,237 are domestic customers and 126 international customers. These customers are spread across a wide array of application industries, including pharmaceuticals, agrochemicals, aroma chemicals, electrical chemicals, speciality polymers, construction chemicals and VAM original equipment manufacturers. Among the major customers are Austin Chemical of the US, CBC of Japan, and DIVI’s Laboratories, Laurus Labs, Solway Specialities India, Thermal and Voltas – all of India. The number of customers is on the rise.
• z Besides expanding its manufacturing and marketing its speciality chemicals products, the company has planned to increase the size and scale of its contract research and manufacturing business over the next few years and is in discussions with various companies in Europe and Japan to develop their proprietary products, for which the company has already executed non-disclosure and secrecy agreements.
• z Neogen’s finances are growing steadily. During the last five years, its sales turnover has expanded from Rs 121 crore in fiscal 2021 with the profit at net level shooting up from Rs 7.75 crore to Rs 31.44 crore during this period. The company’s financial position is getting stronger by the day. As on March 31, 2021, its reserves stood at Rs 133.40 crore, almost six times its equity capital of Rs. 23.33 crore. Prospects ahead are very bright and we expect an EPS of Rs 20 within a couple of years.

PERFORMANCE INDICATORS (Rs. in crore)