Why did Natco Pharma fall Over 28% in Just 2 Days?

Natco Pharma’s Stock with its business in the development and manufacturing of formulations and APIs, has declined steeply over 28 percent, since it posted results with a steep decline in both revenue and Net profits.

Stock Price Movement

With a market capitalization of Rs. 15,733 Crore, the stock of Natco Pharma opened at Rs. 963.95 down 3.78 percent from yesterday’s close, and later fell more to a low of 868.25 down 10.80 percent. After reporting the Q3 results stock has fallen over 28 percent. Additionally, the 1 month’s return for the stock is -30 percent, and the past five year’s return is at 30 percent.

Reason for fall

The company reported a sharp decline in both revenue and Net profits and the profit margins too took a hit. The major reason for the decline in the financials was the reduction in export formulations which fell from Rs. 1211.3 Crore in Q2FY25 to Rs. 285.8 Crore in Q3FY25, and a slight decline in domestic formulations was also seen, both of these are major contributors to the company’s revenue.

Financial Highlights

The company reported a 59.77 percent YoY decrease in revenue from operations from Rs. 758.60 Crore in Q3FY24 to Rs. 474.80 Crore in Q3FY25. On a QoQ basis, the company reported a decrease of 65.37  percent in revenue from operations from Rs. 1371.10 Crore in the previous quarter. 

Their Net profit saw a 37.75 percent YoY decrease from Rs. 212.70 Crore to Rs. 132.40 Crore for the same period. On a QoQ, basis their net profits also saw a decrease of 80.42 percent from Rs. 676.5 Crore for the same period.

The EBITDA Margin for Q3FY25 stood at 33 percent compared to 38.3 percent for Q3FY24, and the Net Profit Margin stood at 20.3 percent from 26.7 percent for the same period.

Also read: Nuclear energy stocks crash up to 6% after concerns over US-India reactor deal

Segment Analysis

The Largest Part of the revenue comes from the Pharmaceuticals Segment which accounts for 96.81 percent of the total revenue. The other 3.18 percent comes from the Agro Chemicals segment.

About the Company

Natco Pharma Limited, established in 1981 and headquartered in Hyderabad, India, is a prominent pharmaceutical company specializing in the development, manufacturing, and marketing of finished dosage formulations (FDFs) and active pharmaceutical ingredients (APIs). The company focuses on niche therapeutic areas, including oncology, cardiology, and neurology, and has expanded into agrochemicals through its Crop Health Sciences division.

Written By Abhishek Das

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