/** Neogen Chemicals Q4 FY26: Strong quarter, but FY26 shows margin and leverage pressure as battery materials capex ramps */

Neogen Chemicals Q4 FY26: Strong quarter, but a capex-heavy transition year

Neogen Chemicals ended Q4 FY26 with a clear improvement in operating momentum, even as the full year reflected the cost of a large transition. On a consolidated basis, revenue for Q4 FY26 rose 22% year on year to INR 247 crore. EBITDA increased 21% to INR 44 crore, and the company sustained an EBITDA margin of 17.8%. Profit after tax for the quarter rose to INR 11 crore.

For FY26, the picture was more nuanced. Consolidated revenue grew 11% to INR 862 crore, while EBITDA was largely flat at INR 137 crore and the EBITDA margin declined to 15.9%. PAT fell 17% to INR 29 crore, reflecting higher finance costs linked to the Dahej rebuild and battery materials capex, alongside transition-related overheads.

The company also reiterated that it is operating in a volatile environment for specialty chemicals, with elevated supply chain disruption and input cost pressures linked to Middle East geopolitical tensions. Management stressed that input cost inflation is largely pass-through, but the year still carried overheads and one-off costs associated with the Dahej replacement facility and interim toll manufacturing arrangements.

Segment performance: Organic steady, Inorganic strong in Q4

Neogen reports consolidated revenue across Organic Chemicals and Inorganic Chemicals. Organic remained the dominant contributor, while Inorganic showed a sharp step-up in Q4.

For FY26, Organic Chemicals delivered INR 734 crore, up 10% year on year. Inorganic Chemicals delivered INR 128 crore, up 14%. In Q4 FY26, Organic Chemicals revenue was INR 194 crore, up 7%, while Inorganic Chemicals revenue was INR 53 crore, up 145%.

On the conference call, management indicated that the quarterly growth was largely volume-led, with only a small portion attributed to pricing. The inorganic jump was also described as predominantly volume driven, with management noting that periods of rising lithium prices can pull forward demand.

Battery chemicals: small base today, central to the strategy

Neogen Ionics, the battery chemicals subsidiary, contributed INR 13 crore revenue in Q4 FY26 and INR 36 crore in FY26. Management clarified that electrolyte revenue within this number was below INR 10 crore for FY26, and the majority of the subsidiary’s revenue came from salts.

The expansion program remains the strategic centerpiece. The company disclosed a revised aggregate project cost for Neogen Ionics of INR 1,795 crore across Dahej Phase 1 and Pakhajan Phase 2. Dahej Phase 1 is now budgeted at INR 428 crore with expected completion by February 2027, while Pakhajan Phase 2 is budgeted at INR 1,367 crore with expected completion by March 2027.

Management attributed the revision to design optimization following a transition from in-house processes to advanced Japanese technologies, along with higher localization of critical sub-components aimed at reducing import dependence and improving long-term operational reliability. During the call, management also linked part of the capex increase to the addition of a 500 MTPA intermediate facility.

Commercial timelines were reiterated. The Pakhajan greenfield site is expected to commence commercial manufacturing of electrolytes in H1 FY27 and electrolyte salts in H2 FY27. Management said mechanical assembly was complete and the project had moved into trial-run phase for process stabilization.

Customer qualification updates were also discussed. Management stated that three US-based electrolyte makers had completed audits and that post-audit corrections should be completed within one or two months, with commercial supply from the Dahej site expected to begin around July or August 2026. The company also spoke about ongoing engagements with domestic and global cell manufacturers, with some customers already buying small volumes and others in evaluation stages.

Dahej fire incident: insurance receipts and a critical commissioning milestone

A key near-term operational milestone is the replacement plant at Dahej, following the fire incident. The company reported cumulative on-account insurance claim receipts of INR 140 crore and salvage realization of INR 7 crore. Net claim receivable was stated at INR 203 crore. Management reiterated that reconstruction is on track and commissioning is expected by June 2026.

This commissioning matters for two reasons. First, it is required for the standalone business to move back to a normalized production rhythm after the transition and tolling arrangements. Second, it influences working capital and operating leverage as fixed-cost absorption improves.

Management also linked parts of the FY27 standalone outlook to the Dahej timeline. On the call, the company guided standalone FY27 revenue at INR 875 to 950 crore and clarified that this guidance excludes Neogen Ionics battery chemicals revenue. Management also noted that this range is lower than an earlier aspiration because Dahej commissioning slipped versus their earlier internal timeline due to labour shortages in construction.

Balance sheet: leverage up as capex ramps

The capex cycle has materially changed Neogen’s balance sheet. As of March 31, 2026, consolidated total debt was INR 1,330 crore and net debt was INR 1,295 crore. The company attributed the debt increase to targeted funding for the Dahej facility rebuild and ongoing capital deployment at Neogen Ionics. Liquid investments including fixed deposits were reported at INR 35 crore.

On the call, management acknowledged working capital stress and explained that the company negotiated longer credit terms with suppliers, with some vendors using factoring against Neogen’s payment lines. Management indicated that insurance receipts and operational normalization should help stabilize working capital cycles over time.

The board recommended a final dividend of INR 1 per equity share for FY26, subject to shareholder approval.

What to track next

Neogen enters FY27 with two parallel execution tracks: stabilizing the core specialty chemicals business after the Dahej disruption and ramping the battery materials platform through Neogen Ionics.

Management’s explicit markers for investors are clear. Dahej replacement commissioning is expected by June 2026. Pakhajan electrolytes are targeted for H1 FY27, and electrolyte salts for H2 FY27. The company reiterated a standalone revenue range of INR 875 to 950 crore for FY27 excluding battery chemicals, and separately indicated that Neogen Ionics could deliver more than INR 300 crore revenue in FY27 with a larger share in the second half.

The transition is capital intensive and has already lifted leverage, so the operating proof points in FY27 will be less about a single quarter and more about commissioning timelines, customer qualification, and steady ramp-up. If those milestones land as guided, Neogen’s financial profile could begin to reflect operating leverage from both the normalized core plants and the scaling battery materials assets.