Neogen Chemicals (NEOGEN)

FairStock Score: 17/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Sales growth of 9.23% with latest quarter revenue of ₹220 Cr shows demand is not collapsing.
• Promoter holding of 51.23% provides alignment with minority shareholders.
• Positive book value of ₹304.98 gives some equity cushion.
• Company remains net profitable at ₹4 Cr in the latest quarter, so there is no cash burn.

Concerns

• Profit growth is -63.14% and latest net margin is only about 1.8%, showing severe earnings compression.
• P/E of 145.61 and P/B of 5.42 imply no margin of safety at the current price.
• ROE of 4.78% and ROCE of 8.82% are weak, especially with debt/equity at 1.41.
• Piotroski F-score of 4/9 and dividend yield of 0.07% signal deteriorating financial health and no income support.

AI Analysis

At ₹1,654.50, Neogen Chemicals is priced at 145.6 times trailing earnings and 5.4 times book value. That alone tells me the market is paying for perfection, yet the numbers are far from perfect. Profit after tax has fallen 63.14%, and the latest quarter produced only ₹4 crore net profit on ₹220 crore sales. That is a sub-2% net margin. A specialty chemicals company with 9.23% sales growth should be converting that growth into earnings; instead, margins are under severe pressure. Return on equity is just 4.78%, return on capital 8.82%, and the debt-to-equity ratio stands at 1.41. When profits are thin and leverage is high, a small operational setback can destroy shareholder value. The Piotroski F-score of 4 out of 9 and PEG ratio of 15.78 reinforce the same conclusion: deteriorating fundamentals at an exorbitant price. The 0.07% dividend yield means investors are not being paid to wait. Even the 51.23% promoter holding, while a positive alignment indicator, cannot compensate for this balance-sheet and earnings picture. Graham would say: no calculation of intrinsic value is possible when earnings are collapsing and the price-earnings multiple is 145. I would need evidence that margins have stabilized, debt is coming down, and returns are moving toward a respectable level. Until then, the risk/reward is badly skewed. A stock can be a good business someday, but this is not a good investment today. I would keep it on the watch list and wait for either a much lower price or a demonstrated turnaround.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer