Natco Pharma shares: Natco Pharma Ltd.’s shares increased 18% during Friday’s trading, bringing their four-day rally to 26%. The pharmaceutical company’s consolidated profit increased five times to Rs 212.70 crore in the December quarter from Rs 62.30 crore in the same quarter the previous year, which contributed to the recent surge in the stock price. Revenue increased by Rs 795.60 crore YoY from Rs 513.30 crore. The quarter’s EBITDA margin increased to 38.4% from 24.7% YoY.
Natco Pharma’s third-quarter results exceeded Nuvama Institutional Equities’ projections by 33% and 84%, respectively, on the revenue and EBITDA fronts. This was primarily due to a higher gRevlimid share, but RoW also increased.
The Natco Pharma stock increased 18.18% on the BSE to reach a high of Rs 1,048.15.
“A huge gRevlimid opportunity and a strong US pipeline—olaparib, erdafitinib, semaglutide, etc.—have been unlocked by Natco’s focus on complex opportunities. The RoW markets also saw growth, aided by subsidiaries. In addition to investing in innovations like CAR-T, a strong BS gives room to pursue inorganic opportunities across markets. In Q3FY24, we observe a weaker India and Agrochem, but we anticipate a rebound next year,” stated Nuvama.
The domestic brokerage increased its estimates for Natco Pharma’s FY24E and FY25 EPS by 21% and 12%, respectively, to account for the beat, higher gRevlimid, and lower tax. According to Nuvama, Natco’s gRevlimid opportunity is performing better than anticipated, as seen by the tremendous beat in Q3 and the likelihood that it will continue until January 26 as it prepares to supply larger volumes.
“Looking past FY25, a strong US pipeline includes multiple FTF products like erdafitinib (own filing), olaparib, and semaglutide (sole FTF in 8mg; partnered Viatris). In addition, chances like gLonsurf, Yondelis, Calquence, and gKyprolis, among others, ought to be profitable in the future. Furthermore, other growth drivers like subsidiaries and RoW markets have begun to support growth, according to Nuvama.
Though Nuvama expects a limited impact on our estimates, it acknowledged that there is a chance of unfavorable action regarding the Kothur plant and the risk of pipeline monetization. pursuing intricate chances for sustained expansion
The long-term picture is getting better with gRevlimid picking up and Natco pursuing complex opportunities like CAR-T in India, semaglutide, Olaparib, etc. with gRevlimid cash. Utilizing a SoTP, we assign a 25x multiple to the Q3FY26E EPS of the base business, resulting in a value of Rs 483/share for Natco. Revlimid value has increased to INR 380/share (from INR 348), and other P-4 opportunities are now valued at INR 194 (from INR 187) as we extend the valuation period to December 25E. At a target of Rs 1,055 (previously Rs 980), maintain ‘BUY/SO,’ it stated.
