Antique Stock Broking sets ₹3,050 target for Neogen Chemicals
The Indian brokerage initiated coverage with a 'Buy' rating, projecting a 23% upside for the specialty chemicals firm, citing its expanding battery chemicals division and non-Chinese supply chain opportunities.
Antique initiates Neogen Chemicals coverage
Antique Stock Broking has commenced coverage of Neogen Chemicals, assigning a 'Buy' rating with a target price of ₹3,050. This price indicates a potential upside of approximately 23% from the reference market price of ₹2,482. The Indian specialty chemicals manufacturer is expected to enter a significant growth phase, driven primarily by its expanding battery chemicals business.
This expansion is supported by increasing domestic battery production in India, securing customer approvals, and capitalising on demand from non-Chinese supply chains.
Battery chemicals to drive earnings growth
The brokerage forecasts substantial earnings growth for Neogen Chemicals through to FY30. Revenue, earnings before interest, tax, depreciation, and amortisation (EBITDA), and adjusted profit after tax (PAT) are projected to achieve compound annual growth rates (CAGRs) of 45%, 49%, and 87% respectively between FY26 and FY30.
Antique expects the battery chemicals segment, which includes Neogen Ionics' production of battery electrolyte and lithium hexafluorophosphate (LiPF6), to increase its revenue contribution from 4% in FY26 to 62% by FY30, reaching EBITDA break-even in FY27.
Strategic positioning in global supply chains
Neogen's strategic advantage stems from lengthy customer qualification processes, which typically take 12–24 months. Once qualified, battery manufacturers are reluctant to switch suppliers. The company has successfully completed final plant audits with three US electrolyte manufacturers, positioning it to meet demand linked to US tax-credit regulations.
These rules, effective from 2027, restrict sourcing from certain Chinese suppliers. Neogen's joint venture with Japan's Morita for lithium salt production further strengthens its export capabilities, ensuring a non-Foreign Entity of Concern (FEOC) structure.
Antique projects Neogen's overall revenue to rise from ₹8.62 billion in FY26 to ₹37.59 billion in FY30, with EBITDA improving from ₹1.37 billion to ₹6.75 billion over the same period.
While the outlook is positive, the investment case depends on the timely ramp-up of new facilities, consistent customer offtake, and the company's ability to manage its elevated debt, which includes approximately ₹17.95 billion in capital expenditure.
Investors will monitor the progress of domestic battery manufacturing and any changes to US regulations, as these factors could influence the anticipated free cash flow generation from FY28 onwards.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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