Thread by @ValueEducator

#neogenchemicals Q3 2022 Concall highlights 🧪⚗

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Operational Highlights

1. Highest quarterly revenue of ₹132.6 Cr, growth of 56% YoY
2. EBITDA grew by 41% YoY to ₹23.8 Cr

3. robust revenue gains driven by higher contribution from recently commissioned phase I & II expansions at Dahej SEZ

4. EBITDA performance includes transient cost impact related to Phase I & II expansion. This will be neutralised once the new plants operate at optimal utilisation levels.
5. Mahape and Vadodara continue at high utilisation levels.

6. Domestic revenue contribution stood at 55%, rest 45% were export oriented
7. Demand for Lithium-based chemicals tends to be strong in Q4 as demand from the HVAC segment.

Business strategy

1. Aggregate revenue target of ₹750 Cr for FY24 including contribution of new lithium segment.
2. Phase 1 capex is used more on agro intermediates and phase 2 has pharma molecules and bromine derivatives

3. September FY23 should see full utilisation and revenue guidance of ₹650-₹675 Cr by Q2FY23 is anticipated
4. FY24 guidance may change depending on existing performance
42%( +/- 2%) gross margins level are sustainable

5. Lithium carbonate prices went up to $15-$18/ kg and are expected to rise in the next few quarters. Most of the incremental prices are passed on to customers.
6. Demand for electrolytes will be more on the renewable energy storages and hydrogen production facility

7. Different batteries have different cathode chemistry, this determines the composition of electrolytes and solvent in the battery. For every consumer the product is similar but not identical
8. Also looking for opportunities in lithium based battery additives

9. Electrolyte prices are different in Japan, Europe and China.

Segmental performance

1. 79% of revenues for Q3FY22 were contributed from the organic segment with growth of 53% YoY
2. Rest 21% is contributed from the inorganic with growth of 70% YoY

3. Early stage projects in CSM is undertaken

Capex

1. New lithium capex is expected to be commercialised by Sep FY23
The volumes at Dahej are ramping up for phase 1 and phase 2 expansions

2. Three more capex under consideration after the lithium facility
i) Large capex for electrolytes at karkhadi plant (depending on PLI scheme benefits and customer response for electrolyte products) 15-18 months is required to setup the facility

ii)Lithium salts at Dahej (decision to be considered post June FY23 and construction should be completed within ) 10-12 months is required to setup the facility

iii) Increase in organic capacity (decision to be considered by Sep-March period FY23) 12-15 months is required to setup the organic MPP

Expecting ₹50-₹100 Cr capex in the first phase.