Neogen Chemicals raises Rs 600 crore through oversubscribed maiden QIP to strengthen balance sheet

Neogen Chemicals Limited has completed its first qualified institutional placement, raising approximately Rs 600 crore in an issue that was oversubscribed by more than 6.5 times. The capital raise comes as the speciality chemicals maker moves from a heavy investment phase towards commissioning and ramping up its battery-materials facilities and restoring operations at Dahej.

The company allotted 26,60,753 equity shares of face value Rs 10 each at Rs 2,255 per share, including a premium of Rs 2,245 per share. The issue price was about 3 per cent above the QIP floor price of Rs 2,189.73 per share.

Following the allotment, Neogen’s paid-up equity capital increased to about Rs 30.04 crore, comprising 3,00,42,427 shares, from Rs 27.38 crore, comprising 2,73,81,674 shares before the issue. Based on the disclosed share count, the QIP shares represent about 8.9 per cent of Neogen’s enlarged equity capital.

The company said the proceeds will be used to repay or prepay certain borrowings, fund long-term working-capital requirements and meet general corporate purposes. The stated objective is to lower debt-servicing costs, improve the debt-to-equity ratio and provide greater financial flexibility for business expansion.

The balance-sheet strengthening is particularly relevant given Neogen’s investment cycle. As of March 31, 2026, consolidated borrowings stood at Rs 1,329.89 crore, while the debt-to-equity ratio had risen to 1.63 from 0.72 a year earlier. The Rs 600 crore QIP is equivalent to about 45 per cent of those reported borrowings, although the entire amount is not earmarked exclusively for debt repayment.

Neogen has been investing heavily in its battery-materials business through subsidiary Neogen Ionics, which is developing electrolyte and lithium electrolyte-salt capacity at Dahej and Pakhajan in Gujarat. The group’s disclosed battery-materials project cost is Rs 1,795 crore, with Rs 1,298 crore incurred cumulatively by the end of the first quarter of FY27.

The company is also nearing the restart of its rebuilt Dahej facility after the March 2025 fire disrupted production. Management has said trial runs are under way and commercial production is expected during the second quarter of FY27. The restart is expected to reduce dependence on toll manufacturing, improve operating efficiency and support the company’s custom synthesis and contract manufacturing plans.

Dr Harin Kanani, Managing Director of Neogen Chemicals, said the transaction enabled the company to raise more equity in one transaction than it had raised in the seven years since listing. He said the funding would improve capital-allocation efficiency as major battery-material investments transition from capital deployment towards operational execution.

The issue attracted domestic and foreign institutional investors, including ICICI Prudential Mutual Fund, Invesco Mutual Fund, Mirae Asset Mutual Fund, SBI Life Insurance, White Oak Capital Mutual Fund, Axis Mutual Fund and Abu Dhabi Investment Authority.

The fundraising follows a stronger first quarter operationally. Neogen reported consolidated net sales of Rs 250.29 crore in Q1 FY27, up 34.04 per cent year-on-year, while profit after Tax rose 65.62 per cent to Rs 16.91 crore. PBIDT margin, excluding other income, improved to 19.27 per cent from 16.87 per cent a year earlier.

However, execution remains central to the investment case, particularly the Dahej stabilisation, battery-material customer qualifications, conversion of provisional approvals into commercial supplies and normalisation of working capital.

As of 3:50 pm on September 21, 2026, Neogen Chemicals shares were trading at Rs 2,367.25, down 4.9 per cent from the previous close. The stock was around 4.9 per cent below its 52-week high of Rs 2,489.10, while its one-year gain of 59.82 per cent compares with a 3.73 per cent decline in the BSE 500 over the same period.

Disclaimer: The article is for informational purposes only and not investment advice.