Natco Pharma
Natco Pharma
HealthcareKey Fundamentals
MicrocapPharmaceuticalsHealthcareTapetide Score
Data-driven rating, 0–100. How it works →
Key Insights
Strengths
2- Company is almost debt free.
- Company has delivered good profit growth of 28.1% CAGR over last 5 years
Weaknesses
1- Tax rate seems low
Growth Rate
AI Analysis — Bull vs Bear
anthropic claude-opus-4.6 5d agoNatco Pharma is a mid-cap pharmaceutical company with a market cap of ~₹14,923 Cr trading at a PE of 13.1x. The company has delivered strong long-term profit growth (26% CAGR over 3 years, 28% over 5 years) and maintains a nearly debt-free balance sheet, but is currently experiencing a sharp TTM revenue decline of -21% and profit contraction of -33%, raising questions about near-term earnings trajectory.
- Nearly debt-free balance sheet provides financial flexibility and reduces interest rate risk in a rising rate environment
- Strong 5-year compounded profit growth of 28% CAGR demonstrates sustained earnings power over a longer cycle
- PE of 13.1x is well below the pharma sector median (~25-30x), suggesting the stock is not priced for perfection despite solid fundamentals
- 3-year ROE of 23% and 5-year ROE of 19% indicate consistently efficient capital allocation above cost of equity
- Compounded sales CAGR of 15% over 3, 5, and 10-year periods shows a durable long-term revenue growth track record
- Price-to-book ratio of 1.63x is modest for a pharma company with 19%+ ROE history, suggesting limited downside from an asset value perspective
- 10-year compounded profit CAGR of 25% reflects the company's ability to grow earnings through multiple market cycles
- TTM revenue has declined -21%, a sharp reversal from the 15% compounded sales growth trend, signaling potential loss of a key revenue stream or patent cliff
- TTM profit has contracted -33%, indicating significant margin compression or one-off revenue loss that is flowing through to the bottom line
- Stock price CAGR is negative across 1-year (-1%), 3-year (-2%), and 5-year (-3%) horizons, showing the market has not rewarded shareholders despite profit growth
- ROE has declined from 23% (3-year average) to 17% (last year), a 6 percentage point drop suggesting deteriorating return profile
- Dividend yield of just 0.18% offers negligible income return, providing little cushion during periods of capital depreciation
- Apparently low tax rate flagged as a concern — any normalization of the effective tax rate could compress net margins further from already declining levels
- Disconnect between strong historical profit CAGR (28% over 5 years) and negative stock returns (-3% over 5 years) suggests the market may be pricing in structural concerns not visible in backward-looking financials
- 52-week high and low data unavailable (showing 0), limiting visibility into recent price volatility and trading range context
This is AI-generated analysis, not financial advice. Do your own due diligence.
AI News Digest
anthropic claude-opus-4.6 2h ago- Sharp Q1 profit decline 57% Aug 21
Q1 profit fell 57% YoY to ₹206.5 crore from ₹480.7 crore, while revenue dropped 44.68% to ₹735.20 crore. EBITDA declined 67.3% to ₹186.5 crore with margins contracting from 43% to 25.4%.
- FDA Form 483 four observations Aug 21
US FDA inspection at the Visakhapatnam FDF manufacturing unit (Aug 17-21) concluded with four observations on Form 483. Company says observations are procedural and will be addressed within stipulated timelines.
- Stock down 11% in six months Aug 21
Natco Pharma shares have declined over 11% in the last six months and about 1.9% YTD in 2026, with market cap around ₹15,600 crore.
- Double-digit domestic growth target Aug 19
Natco Pharma outlined plans for double-digit growth in domestic business and export expansion in its agri segment over the next few years.
- $14M eGenesis biotech investment Aug 25
Invested additional $14 million in eGenesis Inc via convertible notes at 8% interest through subsidiaries in Canada ($9.5M) and South Africa ($4.5M), bringing total investment to $22 million. eGenesis is pioneering porcine organ transplant technology.
- ₹1,300 crore rights issue approved Sep 9
Board approved ₹1,300 crore rights issue of equity shares at ₹2 face value to existing holders, with a fund-raising committee led by V.C. Nannapaneni constituted.
- Active investor engagement drive Aug 19
Scheduled multiple investor meetings across Mumbai, Singapore (Aug 24-26), and Hong Kong (Aug 27-28) organized by Nuvama Wealth and ICICI Securities.
- FY26 annual report filed Sep 4
Natco Pharma filed its FY26 annual report and scheduled its 43rd AGM for September 30, 2026, via video conferencing.
- Promoter gifts 50K shares Aug 26
Promoter Durga Devi Nannapaneni gifted 50,000 shares to her niece on Aug 24 via off-market transfer, reducing her stake marginally from 1.98% to 1.95%.
- Demerger scheme needs revision Sep 9
The rights issue approval necessitates revision of the existing demerger scheme due to the resulting change in capital structure.
TL;DR: Natco Pharma faces a challenging near-term outlook with a steep 57% YoY Q1 profit decline and significant margin compression, compounded by four FDA observations at its Visakhapatnam facility. On the positive side, the company is raising ₹1,300 crore via rights issue, actively investing in frontier biotech through eGenesis, and targeting double-digit domestic growth. The trend is currently deteriorating on financials, but management is signaling confidence through strategic investments, capital raising, and an aggressive investor outreach campaign — execution on domestic growth and FDA remediation will be key catalysts to watch.
Quarterly Results
| Particulars | Jun 2023 | Sep 2023 | Dec 2023 | Mar 2024 | Jun 2024 | Sep 2024 | Dec 2024 | Mar 2025 | Jun 2025 | Sep 2025 | Dec 2025 | Mar 2026 | Jun 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 1,140 | 1,031 | 759 | 1,068 | 1,363 | 1,371 | 475 | 1,221 | 1,329 | 1,363 | 647 | 739 | 735 |
| Expenses | 612 | 573 | 490 | 571 | 558 | 567 | 436 | 673 | 758 | 784 | 489 | 612 | 549 |
| Operating Profit | 528 | 458 | 268 | 497 | 805 | 804 | 39 | 548 | 571 | 579 | 159 | 128 | 186 |
| OPM % | 46% | 44% | 35% | 47% | 59% | 59% | 8% | 45% | 43% | 42% | 25% | 17% | 25% |
| Other Income | 20 | 29 | 37 | 42 | 48 | 64 | 176 | 66 | 62 | 100 | 58 | 78 | 59 |
| Interest | 4 | 4 | 5 | 6 | 5 | 4 | 4 | 10 | 3 | 13 | 10 | 11 | 13 |
| Depreciation | 44 | 44 | 44 | 56 | 44 | 46 | 47 | 98 | 58 | 52 | 46 | 50 | 47 |
| PBT | 500 | 440 | 256 | 478 | 804 | 818 | 164 | 506 | 572 | 614 | 161 | 144 | 186 |
| Tax % | 16% | 16% | 17% | 19% | 17% | 17% | 19% | 20% | 16% | 16% | 13% | -62% | 34% |
| Net Profit | 420 | 369 | 213 | 386 | 668 | 676 | 132 | 406 | 480 | 518 | 151 | 269 | 206 |
| EPS in Rs | 23.47 | 20.6 | 11.88 | 21.57 | 37.32 | 37.81 | 7.43 | 22.7 | 26.84 | 28.94 | 8.46 | 14.96 | 11.53 |
Profit & Loss
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 | TTM |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 825 | 1,042 | 2,020 | 2,185 | 2,094 | 1,915 | 2,052 | 1,945 | 2,707 | 3,999 | 4,430 | 4,078 | 3,485 |
| Expenses | 615 | 777 | 1,337 | 1,256 | 1,300 | 1,332 | 1,446 | 1,681 | 1,772 | 2,245 | 2,234 | 2,617 | 2,433 |
| Operating Profit | 210 | 266 | 683 | 928 | 795 | 583 | 606 | 264 | 936 | 1,754 | 2,196 | 1,462 | 1,052 |
| OPM % | 25% | 25% | 34% | 42% | 38% | 30% | 30% | 14% | 35% | 44% | 50% | 36% | 30% |
| Other Income | 0 | 12 | 14 | 40 | 130 | 107 | 104 | 99 | 105 | 126 | 354 | 272 | 295 |
| Interest | 32 | 23 | 18 | 15 | 19 | 22 | 13 | 18 | 14 | 19 | 24 | 37 | 46 |
| Depreciation | 47 | 51 | 54 | 66 | 81 | 100 | 117 | 143 | 164 | 187 | 235 | 207 | 196 |
| PBT | 132 | 204 | 624 | 887 | 825 | 569 | 580 | 202 | 862 | 1,674 | 2,291 | 1,491 | 1,104 |
| Tax % | 1% | 24% | 22% | 22% | 22% | 19% | 24% | 16% | 17% | 17% | 18% | 8% | — |
| Net Profit | 130 | 156 | 485 | 695 | 642 | 458 | 442 | 170 | 715 | 1,388 | 1,883 | 1,418 | 1,145 |
| EPS in Rs | 8.1 | 9.02 | 27.88 | 37.74 | 35.24 | 25.31 | 24.18 | 9.31 | 39.18 | 77.51 | 105 | 79.2 | 63.89 |
| Div. Payout % | 12% | 14% | 24% | 22% | 18% | 27% | 22% | 48% | 14% | 12% | 6% | 6% | — |
Balance Sheet
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity Capital | 33 | 35 | 35 | 37 | 36 | 36 | 36 | 36 | 36 | 36 | 36 | 36 |
| Reserves | 813 | 1,261 | 1,614 | 3,035 | 3,452 | 3,737 | 4,085 | 4,227 | 4,837 | 5,817 | 7,571 | 9,185 |
| Borrowings | 312 | 113 | 222 | 173 | 386 | 316 | 268 | 416 | 167 | 371 | 279 | 714 |
| Other Liabilities | 226 | 413 | 446 | 470 | 428 | 498 | 403 | 430 | 617 | 682 | 744 | 1,138 |
| Total Liabilities | 1,384 | 1,822 | 2,318 | 3,715 | 4,303 | 4,588 | 4,792 | 5,109 | 5,657 | 6,906 | 8,631 | 11,074 |
| Fixed Assets | 710 | 710 | 833 | 1,019 | 1,227 | 1,584 | 2,023 | 2,312 | 2,427 | 2,491 | 2,698 | 2,803 |
| CWIP | 129 | 212 | 336 | 480 | 638 | 518 | 223 | 130 | 64 | 137 | 225 | 294 |
| Investments | 2 | 22 | 32 | 76 | 169 | 112 | 304 | 308 | 392 | 539 | 474 | 3,127 |
| Other Assets | 543 | 878 | 1,116 | 2,140 | 2,270 | 2,373 | 2,242 | 2,360 | 2,774 | 3,739 | 5,234 | 4,850 |
| Total Assets | 1,384 | 1,822 | 2,318 | 3,715 | 4,303 | 4,588 | 4,792 | 5,109 | 5,657 | 6,906 | 8,631 | 11,074 |
Cash Flow
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating | 93 | 112 | 346 | 464 | 669 | 417 | 299 | 46 | 849 | 1,212 | 1,697 | 1,768 |
| Investing | -120 | -176 | -299 | -1,116 | -611 | -175 | -107 | 4 | -465 | -1,026 | -1,436 | -1,987 |
| Financing | 29 | 154 | -48 | 651 | -51 | -251 | -186 | 35 | -363 | -247 | -211 | 298 |
| Net Cash Flow | 2 | 90 | -1 | -2 | 7 | -8 | 6 | 85 | 21 | -62 | 50 | 79 |
| Free Cash Flow | -25 | -44 | 66 | 57 | 225 | 81 | 92 | -142 | 674 | 855 | 1,300 | 1,379 |
| CFO/OP | 55 | 60 | 69 | 72 | 107 | 90 | 71 | 36 | 110 | 85 | 94 | 148 |
Ratios
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debtor Days | 85 | 92 | 86 | 106 | 88 | 105 | 73 | 116 | 115 | 109 | 103 | 79 |
| Inventory Days | 331 | 482 | 213 | 389 | 545 | 534 | 570 | 496 | 432 | 357 | 405 | 480 |
| Days Payable | 189 | 372 | 160 | 239 | 224 | 244 | 104 | 105 | 153 | 120 | 145 | 216 |
| Cash Conversion Cycle | 228 | 202 | 138 | 257 | 410 | 395 | 539 | 507 | 394 | 345 | 362 | 343 |
| Working Capital Days | 25 | 97 | 71 | 215 | 207 | 295 | 246 | 256 | 198 | 151 | 151 | 111 |
| ROCE % | 17% | 18% | 39% | 35% | 23% | 14% | 13% | 4% | 18% | 30% | 33% | 17% |
Insights
BetaAI-extracted from concalls & annual reports · figures as reported, with sources
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Company Information
NATCO Pharma Limited (NATCO) is a vertically integrated, research and development focused pharmaceutical company engaged in developing, manufacturing, and marketing complex products for niche therapeutic areas. [1] NATCO has established its presence in all three business segments viz. finished dosage formulations (“FDF”), active pharmaceutical ingredients (“APIs”), Contract Manufacturing Business.[2]
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