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Shares of NATCO Pharma plunged 20% on Thursday, February 13, after the company reported a decline in revenue, profit in Q3; What should investors do?
Natco Pharma Shares
Natco Pharma Share Price: Shares of NATCO Pharma plunged 20% on Thursday, February 13, after the company reported a decline in revenue, profit, and operating income for the third quarter of fiscal 2024-25 (Q3 FY25).
Revenue fell 18.16% to Rs 651.1 crore, compared to Rs 795.6 crore in the same period last year. Earnings before interest, tax, depreciation, and amortisation (EBITDA) dropped by 29.49%, coming in at Rs 215.1 crore YoY. The EBITDA margin also contracted to 33% in Q3 FY25, down from 38.3% in Q3 FY24.
On the stock front, NATCO Pharma’s shares fell 19.86% to a low of Rs 975, with significant trading activity. Around 2.15 lakh shares were traded, far surpassing the two-week average of 28,000 shares. The stock turnover reached Rs 21.66 crore, bringing the company’s market capitalisation to Rs 17,542.02 crore.
From a technical standpoint, the stock was trading below its 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day simple moving averages (SMAs). Its 14-day relative strength index (RSI) stood at 28.59, signaling an oversold condition (below 30).
The company’s price-to-equity (P/E) ratio was 10.10, and its price-to-book (P/B) value stood at 2.61. Earnings per share (EPS) were reported at 98.90, with a return on equity (RoE) of 25.89%.
Dividend Details
NATCO Pharma’s board also declared an interim dividend of Rs 1.50 per equity share of Rs 2 each for FY25. The record date for eligible shareholders is set for Tuesday, 18th February 2025, with payments to begin from 28th February 2025.
The company’s business includes research and development, manufacturing, and selling of bulk drugs and finished dosage formulations (FDFs) and active pharmaceutical ingredients (APIs). It serves both domestic and international markets, including regulated markets like the USA and Europe. As of December 2024, the promoters hold a 49.62% stake in the company.
Analysts’ Perspective
“Natco Pharma experienced a significant decline in earnings due to a drop in its export formulation business, particularly following the loss of Revlimid, its key revenue driver. Domestic formulation sales also saw a downturn, impacting overall performance. Despite this, the company remains a strong industry player, benefiting from its vertically integrated structure and focus on niche therapeutic areas and complex products,” said Prathamesh Masdekar, Research Analyst at StoxBox.
“Looking ahead, the company has several key product launches planned over the next five years, which are expected to unlock substantial growth opportunities and significantly improve revenue, profitability, and return ratios from FY26E onwards,” Masdekar added.
