Neogen Chem plunges 5% on disappointing quarterly performance

Shares of Neogen Chemcials plunged nearly 5 percent in early trade on May 15, bogged down by the company’s weak quarterly performance.

The company’s consolidated net profit for the fourth quarter slipped 9 percent on-year to Rs 14.3 crore mainly because of weak operating metrics.

Raw material inflation, along with high finance costs on the back of expansion plans, dragged the company’s EBIDTA margin down 100
basis points year-on-year to 16 percent during the January-March quarter.

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During the quarter under review, the company acquired a 100 percent stake in BuLi Chemicals India and signed an agreement with MUIS, Japan to acquire manufacturing technology licence for electrolytes in India, which lifted its finance costs significantly higher.

The dismal operating performance also offset the 30 percent on-year growth in topline to Rs 203.9 crore.

At 11.47am, shares of Neogen Chemicals were trading at Rs 1,470.45 on the National Stock Exchange, down 3.75 percent from the previous close.

The company announced plans to expand its electrolyte capacity to 5,000 MT and specialty lithium salts capacity to 1,000 MT, which will be operational by June. The collective cost for all capacity expenditure plans will be around Rs 450 crore.

Going ahead, brokerage firm ICICIdirect expects demand to be subdued for the first half of FY22 from the agrochemicals segment as it is linked to the crop cycle, however, it is likely to recover during the second half.

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