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ICICI Securities Report
Natco Pharma Ltd. Q1 FY25 beat was driven by higher sales of gRevlimid while its subsidiaries in Brazil and Canada (Rs 1.8 billion of sales) also did well. India biz saw an uptick on a sequential-basis while a high base of last year dented YoY growth (- 23%).
Crop science growth continued to be marred by stock returns. Management guides for profit growth of 20% for FY25 driven by better market share in gRevlimid (to touch ~33% in H2 FY26).
Natco has a net cash balance of ~Rs 20 billion – earmarked for research and development (8–10% of sales), acquisition in rest of world markets and dividends.
We raise our FY25E–26E earnings by 13–28% to factor in better traction in exports.
We lower our rating to 'Hold' and raise our target price to Rs 1,430 on 20 times for its base business' FY26E earnings and net present value
of Rs 254 for limited competition opportunities in U.S.
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