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Nirmal Bang Report
Neogen Chemicals Ltd.'s Q3 operating performance came significantly below our estimates mainly on account of continued slowdown in agrochemicals and pharmaceuticals segments impacting the base business.
Since aggressive capex expansion for the Battery chemicals vertical is coupled with pressure in the existing business due to global weakness, B/S looks stretched.
However, on the flipside, with the ongoing capacity addition, Neogen Chemicals is poised to grow its Ebitda by ~6 times from FY24E at peak with a blended return on invested capital of ~19%, in our view.
While we remain structurally positive on the business, near-term uncertainties could offer a better entry point, in our view. Maintain Acc.
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