We are going to see peak revenues in FY26, PE will go down more. Already export data confirms, next quater is good. So I presume revlamid revenue drop is factored, any acquisition (next year we can see it happening), which would increase base is always plus (though can’t cover revlamid).
Semaglutide for india may surprise streets.
Let’s see how story unfolds. Head we win, tails we loose less.
There are already many players lined up in Indian Semaglutide. Natco should be looked at as a company to bet on management.
There is no base business, thus can’t assign any terminal value to the business. The bet is on the management to find new avenues of growth in complex molecules and investors should have a much longer timeframe.
Disclosure: I am holding it (~3% of pf)
Are the Q3 results expected to be weak? Why is the share price declining more than that of similar pharma companies? Is it due to market volatility? If so, would this be the best time to accumulate more shares?
Promoter &Insider selling in previous concall itself management indicate uncertainty lies ahead. So there may be price dip in the nearterm.
Sharing below one YouTube video discussing Natco Vs DrReddy
Not invested.
dr.vikas
where is this mentioned in the con-call, can you highlight the same
According to Rajeev Nannapaneni, the upcoming quarter is expected to perform significantly better compared to the previous year. The PAT margin is projected to range between 55% and 60%. Last year, the company posted a revenue of ₹762 crore, while this year it is expected to be around ₹900–950 crore, with a PAT of ₹450–500 crore. Export data also indicates strong results, and the company has a robust product pipeline to drive growth over the next 1–2 years.
In terms of valuation, the recent extreme market volatility has led FIIs to reduce their portfolios, even in fundamentally strong stocks. Natco Pharma, for instance, has 17% FII holding. The current TTM PE of 11 seems unjustified, and the PEG ratio of 0.67 is attractive for a large pharmaceutical company. Since the company primarily exports to the USA, the depreciation of the rupee could make exports more competitive, potentially boosting demand.
However, two uncertainties remain: the impact of Trump’s import policies and the December quarter results, which could significantly alter the outlook.
Disclosure: I am invested and plan to add more.
The management admits there are uncertainties beyond the next two years but is confident about the immediate future due to a strong product lineup, including Revlimid, Semaglutide, and Olaparib. While they have plans and strategies for the next 10–20 years, they stated that predicting market conditions and product approvals beyond 2–3 years is challenging and not something they can disclose. It’s also true that no management can accurately predict industry trends beyond 3–4 years.
Markets like predictability over longer periods of time. In case of NATCO, while they have pipeline of drugs they are working on, there is no certainty on which ones they will win the cases, when they can start manufacturing these molecules and how it will impact their cash flow/revenue/profit. Even their current superstar Revlimid - hard to predict the impact on financials once it goes off patent. Current P/E or other metrics aren’t meaningful.
In cases like this, it is betting on the management and assessment of risk/reward. Once there is clarity on Semaglutide, market may reward much ahead of the drug actually being delivered.
Disc - invested.
