SBI Mutual Fund has reduced its stake in Neogen Chemicals following a market sale of over 2 lakh shares on August 18, 2026. The mutual fund, acting through its various schemes, disposed of 2,11,931 equity shares, bringing its total holding down to 16,50,555 shares.

The disposal was formally disclosed pursuant to Regulation 29(2) of the SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011. The filing indicates that the shareholding decreased by 2% from the previous disclosure threshold, with the reported holding falling from 8.5930% in an earlier notification to the current level. As a result of the August 18 transaction, SBI Mutual Fund's shareholding in the chemical manufacturer fell to 6.0280% of the paid-up share capital. This represents a decrease from the immediately preceding disclosed holding of 6.8019%, which comprised 18,62,486 shares.

Transaction Details

The disposal was executed via an open market sale. There were no encumbrances, pledges, or voting rights other than those attached to the equity shares involved in the transaction. The company's total equity share capital remained unchanged at ₹27,38,16,740, consisting of 2,73,81,674 equity shares with a face value of ₹10 each.

What the Numbers Show

The reduction in SBI Mutual Fund's stake indicates a partial exit or rebalancing within its portfolio allocations for Neogen Chemicals. The drop from 6.8019% to 6.0280% suggests the fund is maintaining a significant but reduced exposure to the stock, staying above the 5% threshold that typically triggers substantial acquisition disclosures under SEBI regulations. The absence of any pledge or encumbrance on the remaining shares indicates a clean holding structure post-transaction.

Neogen Chemicals Limited upgraded its standalone revenue guidance for FY27 to ₹950-1,050 crore from the earlier range of ₹875-950 crore, driven by record quarterly revenues in its organo-lithium and battery chemicals portfolios. The company reported a 67% year-on-year surge in consolidated net profit after tax (PAT) to ₹17 crore for Q1FY27, while consolidated revenue rose 34% to ₹250 crore. To support its aggressive expansion into battery materials and de-leverage its balance sheet, the Board of Directors approved raising up to ₹600 crore through a Qualified Institutional Placement (QIP), subject to regulatory approvals.

The financial results were approved by the Board on July 26, 2026, and reviewed by Statutory Auditors Chandabhoy & Jassoobhoy. During the earnings conference call held on July 27, 2026, Managing Director Dr. Harin Kanani and Chief Financial Officer Gopikrishnan Sarathy highlighted that the strong performance was achieved despite headwinds from the Dahej plant reconstruction and geopolitical freight spikes. The company successfully implemented cost pass-through mechanisms for raw materials, utilities, and freight to protect operating margins.

Financial Performance and Segment Growth

Consolidated EBITDA grew 53% to ₹48 crore, with margins expanding by 260 basis points to 19.3%. Gross profit increased by 37% to ₹117 crore. On a standalone basis, revenue reached ₹252.30 crore, up 37% year-on-year, with net profit rising 37% to ₹19.44 crore. Standalone EBITDA was ₹48.20 crore, reflecting a margin expansion of 30 basis points to 19.1%. Interest expenses rose 65% to ₹23.10 crore due to higher debt servicing costs associated with capital expenditure at Neogen Ionics Limited.

The growth was anchored by robust volume increases across core verticals. Organic chemicals revenue grew 18% to ₹194 crore, while the inorganic chemicals segment surged 158% to ₹57 crore. Neogen Ionics Limited contributed significantly, generating ₹19 crore in revenue compared to ₹5 crore in Q1FY26, representing over 50% of the subsidiary’s entire prior-year revenue in a single quarter.

Strategic Expansion and Capital Allocation

Neogen Chemicals is accelerating its footprint in the lithium-ion battery sector through Neogen Ionics Limited. The Dahej replacement plant reconstruction is nearly complete, with commercial production expected to commence in Q2FY27. Cumulative insurance recoveries stand at ₹164 crore, with a net claim receivable of ₹186 crore pending final settlement.

For FY27, the company expects battery chemical revenue to reach approximately ₹300 crore, comprising ₹200 crore from salts and ₹100 crore from electrolytes. Dr. Kanani noted that US customers are shifting to non-FEOC (Foreign Entity of Concern) suppliers starting January 2027, driving demand for Neogen’s Japanese-backed technology. The company has secured provisional approvals from four international customers for lithium electrolyte salts and completed site audits with all four electrolyte manufacturers.

The proposed ₹600 crore QIP will primarily be used for debt reduction, aiming to lower annual interest costs by ₹40-50 crore if fully utilized. This deleveraging strategy positions the company to capture future growth opportunities, including potential expansions in salt capacity and R&D investments in novel battery additives.

What the Numbers Show

The divergence between standalone and consolidated metrics underscores the strategic pivot toward high-margin battery materials. While standalone operations delivered steady growth, the consolidated EBITDA surge of 53% versus standalone’s 39% indicates that Neogen Ionics is beginning to offset transitional costs at the core chemical business. The 65% rise in interest expenses highlights the leverage required to fund this expansion, making the timely execution of the QIP crucial for balance sheet health. With the Dahej plant nearing completion and trial runs underway, the normalization of core operations combined with scaling battery materials output positions Neogen Chemicals for significant operating leverage in FY27.