Neogen Chemicals – Niche player in specialty chemicals

We at Solidarity Investment Managers own a position in Neogen Chemicals. Attached PDF contains a detailed note on our views. Sharing our summary thesis below

Summary thesis
 Promoters have demonstrated resilience. Their story inspires confidence and trust.
 Neogen total addressable market is continuously expanding. Neogen was already strong in Bromine and Lithium based compounds, it commenced Advanced intermediates and CDMO business in 2018 and is now entering Salts and Electrolytes for Li-Ion EV Batteries.
 We estimate domestic Electrolyte opportunity could be worth ~15000crs by FY 30 where Neogen is well positioned. Exports of Lithium Salts is an additional opportunity. China controls 95% of global supply at present.
 Neogen has executed well growing Operating profits at ~27% CAGR in the last decade.
 Promoter credibility, historical track record, and the opportunity to grow earnings at 25%+ CAGR for the next decade make this an attractive business for us.
 Valuations are expensive basis near term financials; however, valuations basis short term financials are misleading as they miss longevity of growth.
 Our position size has significant buffer for us to buy more on declines, or over time.

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     Neogen Chemicals – Investment thesis Final.pdf (691.0 KB)