Buy Neogen Chemicals, target price Rs 1900: HDFC Securities

HDFC Securities has buy call on Neogen Chemicals with a target price of Rs 1900. The current market price of Neogen Chemicals is Rs 1314.85. Time period given by analyst is one year when Neogen Chemicals Ltd. price can reach defined target.

Neogen Chemicals Ltd., incorporated in the year 1989, is a Small Cap company (having a market cap of Rs 3274.16 Crore) operating in Chemicals sector.

Neogen Chemicals Ltd. key Products/Revenue Segments include Organic/Inorganic Heavy Chemicals and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 157.65 Crore, up 18.83 % from last quarter Total Income of Rs 132.67 Crore and up 70.03 % from last year same quarter Total Income of Rs 92.72 Crore. Company reported net profit after tax of Rs 15.56 Crore in latest quarter.

Investment Rationale
The brokerage BUY recommendation on Neogen Chemicals (NCL) with a target price of INR 1,900/sh is premised on (1) increasing contribution of the high-margin CSM business to revenue, (2) entry into the new-age electrolyte manufacturing business, (3) capacity-led expansion growth opportunity, (4) constant focus on R&D, and (5) improving return ratios and strong balance sheet, going forward. Q4 EBITDA/APAT were 6/7% above the estimates, owing to a 30% rise in revenue and lower-than-expected tax outgo, but were offset by higher-thanexpected raw material cost and other expenses

Promoter/FII Holdings
Promoters held 60.19 per cent stake in the company as of 31-Mar-2022, while FIIs owned 4.36 per cent, DIIs 18.64 per cent.