Accumulate NATCO Pharma; target of Rs 1116: Geojit Financial Services

Geojit Financial Services research report on NATCO Pharma

NATCO Pharma Ltd. (NATCO) is an India-based vertically integrated and R&D focused enterprise, engaged in developing, manufacturing and marketing finished dosage formulations and active pharmaceutical ingredients and intermediates. 9MFY24 revenue increased 62% YoY, owing to robust sales growth in export formulations and APIs. EBITDA grew 110% YoY to Rs. 1,254cr, and EBITDA margin expanded 982 bps to 42.8% in 9MFY24 on the strong performance of Revilimid. Export formulation business registered 69% growth in 9MFY24, backed by Glatiramer and Everolimus sales. Aims to double its revenue by launching new agro products, through targeted advertising in key agrarian states and improving revenue realisation from existing ones.

Outlook

We expect revenue to improve on the back of strong formulation business, stabilisation of prices in U.S, launches of niche molecules and new agro brands. However, increase in freight rates due to red sea crisis may impact profitability. Hence, we downgrade to Accumulate rating with a target price of Rs.1,116 based on 12x FY26E EPS.

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NATCO Pharma - 27032024 - geo