The stock plunged 20% on Thursday to Rs 975.05, following disappointing results announced after market hours on February 12.
The Hyderabad-based pharmaceutical company reported a 37.75% year-on-year fall in consolidated net profit to Rs 132.4 crore for the quarter ended December 2024, hurt by a steep drop in formulations exports. Revenue for the December quarter declined 37% year-over-year (YoY) to Rs 470 crore, primarily due to the absence of gRevlimid sales—a key generic drug—and sluggish demand in the India and Agrochem segments.
Nuvama, in its latest research note, said NATCO Pharma’s Q3 performance was an “all-round miss”, with gross margin at 82.6% but EBITDA margin slipping to 8.2% due to higher R&D costs, crop health losses, and remediation expenses at the company’s Kothur facility.
The brokerage firm cut its FY26/FY27 earnings estimates by 6% and 12%, respectively, citing prolonged weakness in the India and Agrochem businesses and expected higher price erosion in gRevlimid sales from H2FY26 onwards. Nuvama slashed its target price to Rs 1,100 from Rs 1,440, maintaining a ‘hold’ rating on the stock. Based on Friday’s low of Rs 876.15, the revised target price suggests a potential upside of 25.5%.
NATCO Pharma’s shares had closed at Rs 1,216.65 on February 12, before the results were announced. The stock has now declined 40% over the past six months but remains up 3.6% over the last one year.Analysts remain cautious on the company’s near-term prospects. While mid-teens growth in the rest of the world (RoW) markets and a strong U.S. product pipeline could aid future revenue recovery, uncertainties persist around launch timelines and regulatory approvals. Additionally, the Agrochem business continues to underperform, with Q3 revenue at just Rs 151 crore, below expectations.The company, however, remains well-capitalized, with a net cash position of Rs 3,000 crore, potentially enabling mergers and acquisitions that could drive future growth. The company declared a third interim dividend of Rs 1.50 per share for FY25.
According to Trendlyne data, the stock’s average target price is Rs 1,349, implying a 54% upside from current levels. Four out of the 11 analysts covering NATCO Pharma recommend a “buy” rating, three suggest to “hold”, while four recommend to “sell”.
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