Why does Nacto Pharma command a very low/cheap valuation compared to its peers, even after having better financial metrics like ROE, ROCE, sales growth, etc.? Any particular reasons?
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Go through the previous posts in this thread, share what reasons could you find? Mehnat ka fal meetha hota hai
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Better than the last FDA inspection!
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We would like to inform you that the Board of Directors at their meeting held today i.e., September 25, 2025, has given their in-principle approval to evaluate the demerger of the Agro business of the Company into a separate entity.
The management believes that this move shall enable value unlocking of the core business (pharmaceuticals) and enhance long-term growth. Further, it also provides operational flexibility, focused and dedicated management (for respective businesses), different brand positioning for each legal entity.
As a part of the proposed reorganization, the Company may retain a small minority stake in the resulting company. This is to support the company in terms of common services such as R&D, Patents, etc. Support via Transitional Service Agreements (TSAs) at arm’s length pricing.
Agro business is tiny, FY24 revenue of Rs 108 cr, FY25 revenue of Rs 60 cr. Management guided for 160 cr revenue for FY26. At 160 to 170 cr agrochem business will be break even. As per segment disclosure asset base for agro business is about 270 cr.
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Mr Market does not seem to be happy with this decision, the stock has been pushed downwards, can any member enlighten on the way forward? What shall be its implications long term? Why the market does not seem it beneficial?
Natco is not interested in having controlling stake in Agrochem business which is little surpise to me as well. Earlier they were quite bullish on this segment particularly CTPR
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Stock price is basically discounted earnings of the future while the variable mentioned by you all depict the past.
These are mainly for screening good companies but they will not dictate the price
I see gray skies clearing up bit by bit for Natco Pharma
- Kothur Plant received VAI so saga of warning letter over
- Decision to demerge crop protection business as a separate entity, we will get our own agro micro cap now, yay!
- Delisting of Adcock Ingram and Natco minority stake acquisition should conclude by Q2 results declaration date
But the update which I am most anticipating is the conclusion and favourable outcome of Natco’s semaglutide phase III trials as approved by the CDSCO SEC on 11th Dec 2024 & 13th Jan 2025… maybe 3 to 6 months away, I know but this shall pave the way for the company to show its mettle in domestic mfg and sales.
Sanjay and Satyavani Nannapaneni recently inherited their 7.47 lakh shares in March earlier this year after it being held in trust by V.C. Nannapaneni for a bit… they seem to be U.S. based relatives of rajeev and v.c & not part of the core promoter management family
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They have recently sold the shares worth 11 crores in total
And they do seem to be a part of the core promoter group, as the shares were inherited to Sanjay Nannapaneni thorough Will, I am unable to correlate the relationship of them with V C Nannapaneni. Though they surely are a part of the core promoter group and have sold the shares recently
If any other member could help in explaining the relationship and any possible reasons for the selling of the shares
The founder promoter family head is VC Nannapaneni who started Natco with 2 other familiies .. he has a son rajeev N and a daughter… he is very much alive…they own the controlling stake through 2 companies, V.Cs, Rajeevs and sisters personal stakes.. as you said yoirself sanjay and satyavani inherited through a will. V.C. Nannapaneni, Rajeev all very much alive and kicking.. they are most likely cousins having this much stake only, 7.47 lakh shares or 0.5%.. without any say in management or ownership decisions..
Delhi High Court dismisses Roche appeal; NATCO to launch Risdiplam immediately at INR 15,900 MRP.
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Here is my tentative analysis of this matter.
In ca. 2022 NATCOPHARM developed manufacturing capability for Risdiplam which was discovered/patented by Roche (US patent in 2013, India patent in 2015) for the treatment of Spinal Muscular Atrophy (SMA). In 2024 Roche files a suit before the Delhi High Court seeking an interim injunction against Natco Pharma to prevent the launch of generic Risdiplam, based on its Indian species patent. After interim orders, the Delhi High Court finally on 09Oct2025 refused to grant injunction allowing Roche to seek financial damages for patent infringement instead. NATCOPHARM will launch the drug at > 95% discount to Roche’s price in India. Given that the patient population for this is a very small fraction of infants, there impact on revenues and/or profits for NATCOPHARM is not going to be meaningful (probably <1% increase in revenues and/or profits). On the other hand, Roche is allowed to pursue financial damages for its patent infringement and NATCOPHARM faces the possibility of very high punitive damages which could possibly be much more than any (relatively insignificant) profits it gets from selling Risdiplam. Given the Indian patent scenario, the most likely outcome of the patent lawsuit is that NATCOPHARM will be asked to hand over all profits over to Roche - this is indicated by the Delhi High court asking NATCO to maintain proper accounts of all sales and profits made from the sale of Risdiplam. So the most likely outcome is that NATCOPHARM will not make any profits at all and will have overall lost money on account of legal fees/costs (possibly for Roche as well). Overall, the actual financial impact of Risdiplam is likely not going to be meaningful but NATCOPHARM will likely have to mention significant contingent liabilities in the notes to its financial statements that NATCOPHARM as Roche will likely seek immense punitive and notional damages for this matter. To me, the significance of this matter is that its some sort of evidence of the integrity and humanity of the promoter-manager of NATCO pharma.
Would be good to hear other people’s thoughts and in particular whether there is anything wrong with my understanding of facts or inferences thereof.
Disclosure: invested, possibly biased.
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This seems to be a great deep dive after understanding the court order in detail, I agree with your thesis. Thanks for sharing
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On the other hand, the patent claim can potentially be challenged by invoking “Section 3(d) and the regime of compulsory licensing (Section 84 and Section 92)”? Here is some context on this: https://www.perplexity.ai/search/for-an-international-pharma-co-v_ghvFjMT5ubKabojjKwfA#0
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Second insider selling happened in natco this month quterly results may surprise again???
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Same promotor acquired good amount of stocks in March 2025 timeframe. He sold part of it. I guess that is fine. If he had sold all of his holdings now, it would have been a concern.
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Natco released Q2FY26 results today. From next quarter onwards Revlimid sales might decline very significantly making a big dent on the revenue and profitability of the company in the next few quarters until a major launch happens. Nevertheless, two things stood out for me:
(i) Crop sciences revenue was ~52 Cr. In Q1FY26 crop sciences contributed ~35 Cr to revenue and had loss of ~3.2 Cr. So it seems that this division has finally turned profitable.
(ii) As per the consolidated balance sheet total equity at the end of Sep25 was ~8650 Cr implying that at current market cap of ~14,560 Cr the company is trading at a Price to Book of <1.7, the lowest it has been in the last 10 years (and significantly below previous lows).
Investors have to brace for large drop in revenues and profitability in the next few quarters but in general, for companies with highly variable earnings, price to book is often a better way to compare valuations of a company over time.
Disclosure: invested and possibly biased.
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Congratulations to all for bagging the princely sum of Rs. 1.50/- per share dividend as the reward of patiently holding on to Natco for another dismal quarter, in terms of share price movement.. the way the price is floatng just above the cloud in the monthly ichimoku timeframe, I shudder at the immediate future when the quarterly net profits would clock 150 crores or less… what would the collective judgement of the bulging retail holding do? Positive filings by the management to the bourses may motivate the speculators to accumulate Natco but the evil kenevil ICICI Sec has given a much publicized reduce view on Natco and forecasts the price to touch 750 in the near term.. Rajeev is not generous with dividends in Q4 so the patience has to be much firmer… my takeaways from the information at hand about the companys performance and future optimism
The H1 net profit would have been comparable to the PY H1 but for the higher provision, amortization and r&d expenses plus a one time bonus to the employees. We the minority owners of natco are yet to see benefits of the elevated research & development expenses being incurred by natco right through the lenalidomide phase whose curtains have come down but they have done the following in the last 3 years:
- Olaparib, Erdafitinib, Capmatinib and Risdiplam generic Para IV ANDA filing disclosues were made by Natco during this period +
- It successfully litigated the risdiplam case in India,
- It started Phase 2 clinical trials in USA for NRC2694A,
- It applied for the domestic semaglutide and undertook pre launch formalities with the CDSCO,
- Natco bought 35% share of Adcock Ingram and did some very minor niche investments in moonshot companies,
- Is poised to have approximately 1500 - 1700 crores left in their pockets post the minority acquisition of Adcock and
- the company also contrbuted handsomely to the powers that be via the now scrapped Electoral bonds scheme.
In the Q&A it was clear that Natco has become a forgotten company (I got plenty of chances to ask questions so definitely less ppl queing up) and it was upto Rajeev to flex his muscles and he obliged with the following which I shall speculate upon:
- natco is ready with the phase III trials conducted for its semaglutide application and is in a position to file it for consideration and further orders
- FY26-27 will not have any major para IV launches so we have to have to cling on to the hope of Natco being in the first wave of domestic semaglutide launch and the willingness to spend the 1500 crores on another acquisition & new Para IV filings that hold out the promise of future blockbuster earnings
- FY27-28 brings in the optimism of US launches and I speculate that this will be probably starting only on H2 of the year and the most probable names in the reckoning are olaparib, pomalidomide, carfilzomib and perhaps ozempic.. any 2 out of the 4 would be great news but this is 7 to 8 quarters away from here..
we also get direct ownership of the tiny crop health ship that is caught in the doldrums… that was born out of the capaxone surplus I think and the companys way of giving back to the shareholders.. one can only hope that it will post profits from hereon..
onwards, downwards and upwards!!!
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