Shares of NATCO Pharma fell 19% after a dismal Q3 FY25 report that revealed a 37.75% decline in profits, indicating further difficulties in their export formulation sector.
Natco Pharma Shares Tank 19% Post Q3 Earnings:
On Thursday, February 13, NATCO Pharma’s stock fell 19% after the company revealed its third-quarter fiscal 2024–25 (Q3 FY25) results, which showed a drop in revenue, profit, and operating income.
After market hours on Wednesday, the pharmaceutical business said that its net profit for the current quarter was ₹132.4 crore, which was 37.75% lower year-over-year (YoY) than the ₹212.7 crore profits from the same quarter last year.
In Q3 FY25, NATCO Pharma’s consolidated revenue from operations fell 37.4% to ₹474.8 crore from ₹758.6 crore in the same quarter last year.
In the meantime, its profits before interest, tax, depreciation, and amortization (EBITDA) fell sharply from ₹268.1 crore in the same quarter last year to ₹38.8 crore in the quarter ending December 2024, a YoY decline of 85.5%.
Consequently, the company’s EBITDA margin decreased from 38.3% to 33% year over year. With EBITDA margins at 60.5% in the prior quarter of FY25, the fall was even more noticeable sequentially.
The fall in the export formulation business, the firm’s largest source of income, continues to be a major driver in the profits drop. Export formulation income decreased by almost half to ₹285.8 crore in Q3 FY25 from ₹605.6 crore in Q3 FY24. At ₹961 crore, the domestic formulation revenue remained relatively flat compared to ₹994 crore year-over-year.
“The lack of Revlimid, a significant source of income for Natco Pharma, caused a reduction in the export formulation business, which was the leading cause of the company’s sharp profits decline during the quarter. A decrease in domestic formulation sales further impacted overall performance. But because of its R&D-driven strategy and vertically integrated structure, the firm is still a significant force in the market, concentrating on complicated goods and specialized therapeutic areas, according to Prathamesh Masdekar, Research Analyst at StoxBox.
“Over the next five years, the firm plans to introduce several important products as we go forward. It is anticipated that these next launches will open up much room for expansion, leading to notable gains in revenue, profitability, and return ratios starting in FY26E,” Masdekar continued.
Earnings Impact:
The share price of NATCO Pharma fell 18.95% to ₹986 a share on the BSE after the results report, continuing its decline into Thursday’s fifth trading session. Around 10 am, the stock was down 17% at ₹1,008.65 each after recovering part of its losses from opening on a gap-down note.
Despite today’s decline, NATCO Pharma’s stock has increased by 22% over the past 12 months. They have, however, encountered difficulties recently, as seen by the pharmaceutical company’s shares dropping 17% in a single month and 32% in six months.
The NATCO Pharma board also declared an interim of ₹1.50 per equity share of ₹2 for FY25.
“Tuesday, February 18, 2025, has been set as the record date for taking on the record of its shareholders eligible for the payment of the third interim dividend. According to a filing by NATCO Pharma, the payment of the aforementioned interim dividend will begin on February 28, 2025.
