Sales rose +18.25% QoQ, but profit fell -51.90% as costs climbed
Expenses grew faster than revenue, while higher interest and tax rates compounded the operating margin decline.
Filed 31 Oct 2026, 19:53 IST · after market close · Neogen Chemicals Ltd (NEOGEN)
Key takeaways
- Revenue grew +18.25% QoQ, but expenses grew +24.04%, cutting operating margin by 3.95 percentage points.
- Net profit fell -51.90% QoQ as interest rose +33.49% and the tax rate increased 8.80 percentage points.
- Operating margin at 15.32% was only 0.09 percentage points above the 15.23% median for 57 reported Commodities peers.
Price around the results
Revenue growth did not convert into operating profit
Consolidated revenue rose +18.25% QoQ to Rs 295.96 cr, but operating profit fell -6.01% to Rs 45.33 cr. Expenses increased +24.04%, outpacing sales growth and reducing operating margin to 15.32% from 19.27%. The quarter therefore delivered top-line momentum without equivalent operating leverage.
Higher interest and tax rates deepened the earnings drop
Interest expense rose +33.49% QoQ to Rs 27.78 cr, while the tax rate increased 8.80 percentage points to 35.30%. That combination pushed profit before tax down -45.36% and net profit down -51.90% to Rs 8.23 cr. Other income contributed 31.13% of pre-tax profit, making the reported pre-tax result materially dependent on a non-operating item.
Margin moved closer to the Commodities peer median
Operating margin declined 3.95 percentage points from Q1FY27, the only prior quarter shown in the trend. At 15.32%, Neogen was 0.09 percentage points above the 15.23% median among 57 Commodities peers that had reported the quarter.
Management points to capacity additions and electrolyte trials
Management said Neogen Ionics plans FY27 Pakhajan capacity of 30,000 MT for electrolytes and 3,000 MT for electrolyte salts and additives. The company said another 1,000 MTPA was commissioned in Q2FY27, while trial production continues for the remaining 300 MTPA.
Results were filed after market close
The consolidated results were filed after market close on 31 October 2026. A post-results market reaction is not included here.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹296 cr | ₹250 cr | +18.25% |
| Other income | ₹4 cr | ₹4 cr | -2.46% |
| Expenses | ₹251 cr | ₹202 cr | +24.04% |
| Operating profit | ₹45 cr | ₹48 cr | -6.01% |
| Operating margin (%) | 15.32% | 19.27% | — |
| Interest | ₹28 cr | ₹21 cr | +33.49% |
| Depreciation | ₹9 cr | ₹8 cr | +7.20% |
| Profit before tax | ₹13 cr | ₹23 cr | -45.36% |
| Tax | ₹4 cr | ₹6 cr | -27.23% |
| Net profit | ₹8 cr | ₹17 cr | -51.90% |
| EPS (₹) | ₹2.96 | ₹6.29 | -52.94% |
Operating margin of 15.32% compares with a Commodities sector median of 15.23% across 57 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Neogen Ionics commissioned another 1,000 MTPA in Q2 FY27, with trial production continuing for the remaining 300 MTPA.
- The electrolyte facility's mechanical assembly is complete and trial runs have begun.
Expansion
- Neogen Ionics plans FY27 Pakhajan capacity of 30,000 MT for electrolytes and 3,000 MT for electrolyte salts and additives.
- A replacement Dahej plant with the same capacity as the damaged facility is under construction and expected to become operational soon.
New initiatives
- Electrolyte recipes from five to six giga factories are undergoing joint trials.
Problems & risks
- Dahej's current capacity is unavailable following the March 2025 fire incident.
What to watch
- Whether operating margin recovers from 15.32% after the 3.95-percentage-point QoQ decline.
- Whether interest expense growth moderates after rising +33.49% QoQ.
- Progress toward management's stated Pakhajan capacities of 30,000 MT for electrolytes and 3,000 MT for electrolyte salts and additives.