NATCO Pharma Shares Drop 19% After Weak Q3 Results – What Investors Need to Know

NATCO Pharma ’s stock dropped 19% on February 13, 2025, following weak Q3 FY25 results. The company's revenue, profit, and operating income declined significantly, reflecting challenges in its export business.

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Profit and Revenue Decline

For the quarter ending December 2024, NATCO Pharma reported:

Net profit: Rs.132.4 crore, down 37.75% YoY from Rs.212.7 crore.

Revenue: Rs.474.8 crore, a 37.4% decline from Rs.758.6 crore in Q3 FY24.

EBITDA: Rs.38.8 crore, an 85.5% drop compared to Rs.268.1 crore last year.

EBITDA margin: Declined from 38.3% to 33% YoY.

Key Reason for Decline

The major drop in export formulation revenue is the biggest concern, as it nearly halved to Rs.285.8 crore from Rs.605.6 crore in Q3 FY24. Domestic sales remained stable at Rs.961 crore compared to Rs.994 crore last year.

Expert Insights & Future Outlook

Analysts believe that the absence of Revlimid, a key revenue contributor, impacted earnings. However, the company remains strong due to its R&D-driven approach and vertically integrated structure.

Prathamesh Masdekar, Research Analyst at StoxBox, stated, "Natco Pharma witnessed a significant decline in earnings during the quarter, primarily due to a drop in the export formulation business following the absence of Revlimid, its key revenue contributor. Domestic formulation sales also faced a downturn, further impacting overall performance. However, the company remains a strong player in the industry, benefiting from its vertically integrated structure and R&D-driven approach, focusing on niche therapeutic areas and complex products."

"As we advance, the company has several key product launches planned over the next five years. These upcoming launches are projected to unlock substantial growth opportunities, driving significant improvements in revenue, profitability, and return ratios from FY26E onward," Masdekar added.

Stock Performance & Dividend Announcement

The stock hit Rs.986 per share, down 18.95% on the BSE.

Despite today’s fall, it has gained 22% in the past year but declined 17% in a month and 32% in six months.

Dividend: The board announced an interim dividend of Rs.1.50 per share for FY25. The record date is February 18, 2025, and payments will begin from February 28, 2025.

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