Natco Pharma shares crash 19% post Q3; what went wrong for pharma co?

Natco Pharma share price slumped nearly 19% on Thursday, in an otherwise positive broader market, after the Hyderabad-based drug maker as investors weighed weak December quarter earnings. The smallcap pharma stock has under floating in negative terrain for the last five sessions, eroding nearly 26% of its market value.

On Thursday, Natco Pharma shares opened sharply lower at 986, down 18.8% from the previous closing price of ₹1,216.65 on the BSE. Extending opening losses, the pharma stock dropped as much as 19.3% to hit a low of ₹981.85, while its market capitalisation slipped to ₹17,588 crore.

At the current level, the stock is down 40% from its 52-week high of
₹1,638.35 touched on September 12, 2024, while it is up 15.6% from its 52-week low of ₹849.20 hit on February 14, 2024. Natco Pharma share price has risen 16% in a year, while it lost over 32% in six months, and 29% year-to-date (YTD).

Export formulation biz dented Q3 earnings  

Natco Pharma released its Q3 results post market hours on Wednesday, which fell short of market expectations amid decline in export formulation business which is the biggest revenue contributor for the firm.

For Q3 FY25, the consolidated net profit stood at ₹132.4 crore, down 37.75% as compared to ₹212.7 crore in the previous quarter of last year. The revenue from operations also declined by 37.4% to ₹474.8 crore in Q3 FY25 from ₹758.6 crore in the year-ago period. On the operating front, Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) fell sharply by 85.5% YoY to ₹38.8 crore, while margin dropped significantly to 33%, down from 38.3% in the year ago period.

During the quarter under review, export formulation revenue nearly halved to ₹285.8 crore from ₹605.6 crore in Q3 FY24, while the domestic formulation revenue dropped marginally to ₹961 crore from ₹994 crore in the same period last year. In the September quarter of FY25, export formulation revenue was ₹1,211.3 crore, while domestic formulation revenue stood at ₹102.3 crore.

“During the quarter, contribution from the export formulation business was lower. However, the company expects healthy growth of business in the ensuing quarters,” Natco Pharma said in its earnings report.

The board of the company also declared third interim dividend of ₹1.50 (75%) each per equity share of ₹2 each for the financial year 2024-25. The record date for determining eligible shareholders for the purpose of payment of third interim dividend is February 18, 2025, while dividend payment will start from February 28, 2025.

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