Natco Pharma’s share price has experienced a significant decline, dropping over 18% following the release of its third-quarter financial results for fiscal year 2024-25. The company reported a 37.75% year-on-year decrease in net profit, amounting to ₹132.4 crore, down from ₹212.7 crore in the same quarter of the previous year. Additionally, consolidated revenue from operations fell by 37.4% to ₹474.8 crore, compared to ₹758.6 crore in the corresponding period last year.
A primary factor contributing to this downturn is the substantial decline in the export formulation business, which is Natco Pharma’s largest revenue segment. In Q3 FY25, revenue from export formulations nearly halved to ₹285.8 crore from ₹605.6 crore in Q3 FY24. The domestic formulation segment remained relatively stable, with revenues of ₹96.1 crore compared to ₹99.4 crore year-on-year. Meanwhile, the active pharmaceutical ingredient (API) segment experienced growth, with revenues increasing to ₹66.6 crore from ₹46.3 crore in the corresponding quarter of the previous fiscal year.
The decrease in export formulation revenue is largely attributed to the reduced contribution from Revlimid, a key product for the company. This decline has significantly impacted overall performance. Despite these challenges, Natco Pharma maintains a strong position in the industry, supported by its vertically integrated structure and research-driven approach, focusing on niche therapeutic areas and complex products.
In response to the earnings report, Natco Pharma’s stock has been under pressure, reflecting investor concerns over the company’s recent performance and future prospects. The stock saw its most significant decline in nearly five years, dropping as much as 18.6% to ₹992.5 per share in early trading.
Looking ahead, the company has several key product launches planned over the next five years, which are projected to unlock substantial growth opportunities, driving significant improvements in revenue, profitability, and return ratios from FY26 onward. Additionally, the company’s board has declared a third interim dividend of ₹1.50 per equity share of ₹2 each for the financial year 2024-25, with the record date set for February 18, 2025, and payment starting from February 28, 2025.
In summary, while Natco Pharma is currently facing significant challenges, particularly in its export formulation business, the company is actively working on strategies to overcome these hurdles and is focusing on future growth opportunities.
Natco Pharma’s share price dropped over 18% following a 37.75% decline in Q3 FY25 net profit, falling to ₹132.4 crore. The company’s revenue also decreased by 37.4% due to a significant drop in export formulation sales, particularly from its key product, Revlimid. While the API segment showed growth, investor concerns over declining earnings led to the stock’s sharp decline. Despite challenges, Natco Pharma remains focused on future product launches and long-term growth opportunities, with expectations of improved performance from FY26 onward. The company also declared a third interim dividend of ₹1.50 per share.
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