NGL Fine-Chem (Animal Health + Human Health + Vet Formulations)

Notes from AR iro NGL Finechem for FY 21-22 -

  1. A prominent animal healthcare company in India with a global footprint. A leading manufacturer of animal APIs, advanced intermediates and finished dosage forms. Has 3 state of the art manufacturing facilities in Maharashtra - two at Tarapur and one at Navi Mumbai.
  2. Current product portfolio of 21 animal APIs, 02 human APIs, 04 intermediates and 10 formulations. Revenue breakdown -
    Veterinary APIs - 82 pc
    Human APIs - 7 pc
    Intermediates - 9 pc
    Formulations - 3 pc

Geography wise revenue breakdown -
India - 24 pc
Europe - 28 pc
US - 3 pc
Asia Pacific - 30 pc
RoW - 15 pc

Company has 50 pc plus mkt share in top 3 of its products.

  1. Key performance highlights -

Veterinary APIs grew 26 YoY in FY 21-22
Revenues increased to 318 cr from 258 cr
EBITDA at 69 cr vs 77 cr
PAT at 53 cr vs 55 cr
EBITDA margins at 21 pc vs 30 pc

Aim to launch 3-4 products per year. Currently have 5 molecules in pipeline, each with multi step synthesis. These products are likely to be margin accretive. Their newly launched poultry molecule has shown wide acceptance and is clocking in good sales. Company completed expansion at Macrotech’s plant ( subsidiary ) in the FY 21-22. Also added capacities with brown filed expansion at Tarapur.

  1. Animal healthcare mkt likely to grow at 5pc CAGR upto 2027. Bulk of company’s products cater to the cattle market and the company expects the trend to continue in future as well. Company’s 4 yr CAGR for revenue, EBITDA and PAT stands at 27 pc, 34 pc and 41 pc !!! Company is likely to out source 15 pc of its manufacturing to cater to increasing demand. Also, 50 pc capacity expansion ( Greenfield ) at Tarapur is lined up. Total outlay for this capex is 140 cr. Likely to be completed by next FY.

Disc : invested, biased.


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NGL presentation gets better

NGL_Qtr 2 ppt 161122.pdf (1.3 MB)

Disc:Views may be biased bcos of my holding .2nd largest holding in portfolio after Arman Financials


Notes from Q2FY23 concall dated 17th Nov (link)

Current performance:
• Margins are subdued, will come back to normal levels once demand picks-up. Observing encouraging signs.
• Some customers have started with new inquiry. Few still have high inventory which will get depleted by Q3 or Q4. Pricing has been under pressure. Prices have started softening.
• Have not lost market share.
• Reduction in logistic cost, demand to improve by Q4’23. Freight cost impact. Had been in the range of ~1200 – 1400 TFC went up to ~10000 – 10500 TFU. Now to 3500 to 4000 dollars.

Growth Levers:

• Further growth rate for top 5 products – 20% drop in volume for those, hopeful that this will revive next year. Drop in top 5 -due to stocking last year and de-stocking now. Also, demand has come down due to price inflation RM price going up. Farmers typically cut down consumption due to high price.
• Normalized growth for Top 5 – will normalize but will take couple of years. 8 – 10% guidance. Volume de-growth of 20% in H1 FY22.
• New launch: Total 5 products for this FY, 2 earlier, 2 in last quarter and 1 between Dec-March. Commercial only 6+ months after production. Sales potential of 40 crs from the products during 2nd full year. Market size for those products is ~700 Crs. – 800 Crs.
• New products takes time to gain market share since current incumbent has entrenched relationship.
• Have 13 step processes for one of the new products.
• Is very price sensitive market considering B2B. will take time to strengthen position.

• Greenfield capex – have re-started procurement, civil construction is 60%. Will reassess capex amount in next few days. Will have firm numbers by Q3 call.
• New capex operationalization time, FY24. Civil construction will be over by June23. Machinery by Jan-Feb next year. Expected to be Q4’FY24.
• Product basket – Top 10, how much further headroom we may have since they are already close to 300 crs? Demand was subdued from 35% to 27%. Sales from top 10 though has been stable. Broad basing the product basket has helped tide over the tough times. Top 3 are matured products hence not much incremental growth can be there. Larger growth will come from new products.
• Customers are eager and willing and encouraging us to come up with product development. They are looking at supplier diversification.
• As part of the capex, production selection is beyond current top 5. Will be for new products + to meet demand growth for rest 10 products.
• We want to expand to 25 products. Another 5 can go by next year. Objective is to have 30 product from current 20. New environment clearance filing to be done for some of the new products.

• Right to win for new products – price or complexity of process: Looking at products where supplier are China only. Also, chemistry skills for efficient production. Finally on pricing front.
• Out of 22 API – split between farm/poultry. Currently farm animal only. Poultry only 1product. Distribution chain between farm vs. companion animals. In EU, market is well segregated between the two however in rest of the markets, not well demarcated.
• Most sales is direct to formulator not to the distributors.
• Supply to top 5 producers in animal APIs.
• Anti-microbial resistance – EU has mandated reduction of 70% of antibiotics. Starting from 2016 for 7 years window. Total market has gone down. We don’t make antibiotics (Penicillin based) and we are also not in EU.
• Capacity Utilizatio is ~70%.
• Spare capacity for next 2 years. Margin may be under pressure to fill the capacity.
• Contracts in USD, forex impact to financials. M2M was ~2% loss, Q2 was 7% loss (of sales).
• Peak revenue potential of 360 – 400 Crs from current capacity.

Disc: Invested


NGL Fine Chemicals Q4FY23 Concall Summary. Henceforth, the company will do only half yearly concalls


Hi Friends, can anyone share notes from the latest AGM. Thanks.

Excellent result by NGL Finechem -very conservative promoter ,whether in good times or bad times he speaks rationally but investors discounts him on either side and extrapolates results

NGL_Q2FY24.pdf (907.7 KB)

Discl:Biased bcos of my holdings ,please do your own due diligence


Management had mentioned abut conducting a concall every 6months. The last one was for Q4’FY2023. Is there a Concall planned for this quarter results ?

The conference call is scheduled for 20-Nov-2023(today). Check BSE site for details.
Disc: Not invested

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yes, there is a concall today

The concall as requested…

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I agree. Conservative promoter which is what giving me some comfort. He slowed down Capex, very careful on taking debts. If EU economoy grows, they will do fine.


NGL finechem now have two consecutive quarters of comparatively better results - after a prolonged phase of subdued revenue and margins. Specially, FY23 had been a tough phase for company, both top line and margins took serious beating.

For Q3FY24, on a consolidated basis:

  • 22% Y-o-Y revenue growth | 10% Q-o-Q revenue Growth
  • Y-o-Y 67% Net Profit growth | flattish Q-oQ net margin growth.
  • Operating margins in the range of 16% (have been in the range of 20% - 30% in recent times except for FY23, which really had been tough for company)

Some noteworthy excerpt from recent investor presentation:

In light of the promising signs of demand recovery, we are accelerating our CAPEX plans, aiming to complete phase 1 by the end of Q2FY25. With an investment of ₹75 crores earmarked for this phase, of which ₹45 crores have already been invested, we are laying the groundwork for capacity expansion. Phase 1 will see the establishment of all necessary utilities for the entire CAPEX project and the operationalisation of one clean room (API line), setting the stage for further expansion.

As we plan for the completion of phase 1 and look ahead to phase 2, which involves making the remaining 5 clean rooms operational by December 2025, our financial strategy remains focused on prudence and sustainability. The total project cost is maintained at ₹140 crores.

To date, we have invested ₹45 crores in the CAPEX, all through internal accruals. We anticipate
investing an additional ₹25 crores from internal accruals into the project, covering both phase 1 and phase 2 activities. This approach underscores our strategy to increase the proportion of internal accruals in funding this CAPEX, while also acknowledging that some level of debt buildup may occur from Q1FY25 as we advance our expansion plans and strive to meet our
strategic objectives.

As per most recent EC reports, below are the products for which they have got Environment clearance approval. This proposed expansion will increase capacity by 50%.

Margins inching back to 20% levels with expanded capacity kicking-in over next 2 years can be interesting.

In the Annual report for FY23, they have mentioned about European CEP filling for three products namely Triclabendazole, Flunixin Meglumine and Marbofloxacin. This is interesting development. So far they have been rather conservative in going after developed/regulated markets.

  • Triclabendazole appears to be a low competition space with approval granted to Alivira Animal (100% subsidiary of Sequent Scientific) and Rakshita Drugs only.
  • Marbofloxacin - 5 approved CEP players. Wisdom Pharmaceutical, Aurore Life (Originally M/s. Konar Organics Limited) and three different entities belonging to ZHEJIANG group China.
  • Flunixin meglumine appears to be little crowded with 7 approvals so far.

Filling for Triclabendazole in Europe can be particularly noteworthy. Triclabendazole falls in the family of Benzimidazoles class of Anthelmintics. Other significant drugs within Benzimidazoles class (where NGL is not looking to EU market today) are:

  • Albendazole - Only two valid approvals. Sequent scientific (capacity must be ~80MT/M) and recent entry of MSN life science.
  • Fenbendazole - Three group of companies has European approval. Shaanxi Hanjiang (China), Jiangsu Baozong (China) and Sequent Scientific.
  • Oxfendazole - Only three approved players. Jiangsu Baozong & BAODA (China), Shaanxi Hanjiang Pharmaceutical, and ALIVIRA ANIMAL (Sequent Scientific)
  • Mebendazole - Only three approvals. Changzhou Yabang-Qh (China), Shaanxi Hanjiang Pharmaceutical (China), and MSN Life India.

As of today, we dont have visibility if NGL is going for the other APIs excpet Triclabendazole for Europe. However from adjacency perspective, can be interesting opportunity for two reasons- a) they now have filing for Triclabendazole for Europe. b) each of the products within Benzimidazoles class of Anthelmintics has low competition intensity for European market

Disc: Invested, no transactions in last 60+ days


Agree. I feel true test of a company is when things are bad…the whole industry is in bad shape and if we compare performance of NGL to peers like Sequent, Lasa one can clearly see the difference. The management commentary has improved now and the capex plans are back in action now.

The market has been smart and patient on good cos.

Disc: continue to be invested in family and client acs


Great research and insights .Please keep sharing !

Agree with what you said on adjacency .Anyway NGL strategy has been almost like "strengthen the core and grow more thru adjacency also " .Rare to see such great allocator of Capital .Staggered capex of 140 cr thru internal accrual is an example (pay as you grow model type) .

Discl :Views may be biased bcos of my holding


Disc: Invested

Our CAPEX plan is progressing well and remains on
track, with the first phase expected to be completed by
the end of Q2FY25.

We anticipate sustained demand for the coming year,
although margins may take time to fully recover. We
expect EBITDA margins to remain within the 14-17%
band for the next financial year. Our focus will be on
gaining market share and growing our business while
maintaining financial prudence and sustainability


Finally NGL has received EU approval for Triclabendazole after a long wait (link). They have approved capacity of 2000 KG/Month.

Overall, number of EDQM review closures has increased meaningfully since Jan’24. With that, one can expect outcome on other two filings (Flunixin Meglumine and Marbofloxacin) for EU in a reasonable timeframe. Augers well to get started in regulated EU market.

Disc: Holding (no transactions in 60+ days)