Notes from the Q4 call
-
FY22 full year revenue at 487 Crore; had given guidance of 450 Cr. Confident of achieving the targeted revenue of Rs. 725-750 crore in FY24
-
Got approval from Board for an estimated capital expenditure of upto Rs. 150 crore, to be deployed in FY23 at Dahej SEZ Plant for:
• Expanding manufacturing capacity of specialty organic chemicals by 60,000 litres – to support new molecules developed in-house and enhancing ability to do multiple chemistries
• Increasing capacity for manufacturing inorganic salts from 1200 MT to 2400 MT in existing Inorganic MPP – this is to cater to demand from new approvals received from international customers for regular lithium-based products recently and expected growth in their demand in domestic market
• Setting up new capacity in existing Inorganic MPP for 400 MTPA for manufacturing Specialty Lithium Salts and additives for Electrolyte
• Overall site development in Dahej -
Brownfield expansions are expected to be completed by June 2023 and will result into incremental revenue potential of Rs. 250-300 crore per annum post commissioning. Expected to reach full utilisation levels by FY25 or FY26.
-
Incremental potential revenues from Inorganic Chemicals (150 Cr) are based on stable lithium prices. Current market prices in Lithium, are 2.5-3 times of what was the world’s highest price in the last - historic peak. Prices likely to start moderating in the CY 2023.
-
Most of the price increase has been passed on to customers. Many other people who are buying from other companies or from China, are suffering, because their suppliers are not in as good a position in securing lithium as Neogen has been. Customers are appreciative that Neogen has bene able to source Lithium for them.
-
In last 3 to 4 months, has added 20 new customers and out of that, 5-6 new customers have also approved Neogen products and have started buying products from Neogen in the international market. Customers based in US, Europe, China, Japan and Korea.
-
Neogen’s Dahej lithium site started in Feb 2020, post which there were travel restrictions due to Covid. Now, customers feeling more comfortable to travel, had several of lithium customers who came to the site, approved and now have started procuring lithium molecules from Neogen.
-
Capex on electrolyte business - For inorganic business - asset turns are usually better and the margins are usually slightly lower. However have to wait and watch as current investments are trial investments. Will have a better idea on margin profile & ROI with 1,000 MT kind of production capacity.
-
CSM business –
a. By FY24, advanced intermediates will contribute 40% and the CSM will contribute up to 20% revenue of that
b. Made 18-20 molecules last year, which were readied for commercialization, they have completed the pilot work and completed R&D.
c. There are multiple segments which the CSM molecules are catering to – agro, pharma, one is in engineering segment and one in food & flavour segment -
Threat from Sodium ion batteries - Sodium ion is mostly used for energy storage applications. Lithium cells are driving EV applications. Most EV manufacturers and batteries will be Lithium based Even if Sodium ion were to happen, wont impact too much
Disc: Invested