Neogen Chemicals surges 5% after it inks pact with Japanese firm MUIS

Shares of Neogen Chemicals surged 5 per cent to Rs 1,491.40 in Tuesday’s intra-day trade, after the company signed agreement with Japanese MU Ionic Solutions Corporation (MUIS). In the past three trading days, the stock of specialty chemicals rallied 15 per cent, as against 0.3 per cent rise in the S&P BSE Sensex, as of 9:20 am.

Neogen is one of India’s leading manufacturers of Brominebased, and Lithium-based specialty chemicals. MUIS is a joint-venture between Mitsubishi Chemical Corporation (MCC) and UBE Corporation and is a group company of 'The Mitsubishi Chemical Group' (the group) - a Japanese conglomerate.

The group is one of the global leaders in electrolytes used in lithium-ion batteries, with a strong track record of 30 years and has 5 electrolyte manufacturing plants located in Japan, USA, UK and China.

As per the agreement terms, Neogen will obtain license from MUIS for proprietary and confidential manufacturing technology for making Neogen’s electrolyte solutions at its manufacturing facility in India, with a planned max installed capacity of up to 30,000 metric tonne (MT) per annum. These electrolytes will be targeted by Neogen to meet the growing demand of lithium-ion cell manufacturers in India.

The agreement will allow Neogen to ensure manufacturing plants meet stringent global standards for quality, reliability, safety and efficiency for electrolytes production.

"It will also help Neogen to greatly reduce approval times with lithium-ion battery makers. Neogen is honoured to be a recipient of this first-ever license issued by MUIS the part of MCC of electrolyte manufacturing technology anywhere in the globe," the company said.

This acquisition, therefore, will help Neogen to strengthen its position in the electrolyte market in India, said analysts at ICICI Securities.

"The standardised Japanese technology can help to improve battery performance, including power output and lifetime, with functional additives tailored to the purpose, which will ultimately led to gain customers confidence in domestic market. The capex for additional electrolyte capacity beyond the earlier guidance of 10,000 MT by FY26 will depend upon additional demand from customer," the brokerage firm added.