Natco Pharma
Natco Pharma
HealthcareKey Fundamentals
SmallcapPharmaceuticalsHealthcareTapetide Score
Data-driven rating, 0–100. How it works →
Key Insights
Strengths
2- Company is almost debt free.
- Company has delivered good profit growth of 28.1% CAGR over last 5 years
Weaknesses
1- Tax rate seems low
Growth Rate
AI Analysis — Bull vs Bear
Natco Pharma has a market capitalisation of about ₹14,840 crore and trades at a P/E of 13.2 and a P/B of 1.64. Over 5 years, sales grew at a 15% CAGR and profit at a 28% CAGR. On a trailing twelve-month basis, sales fell 21% and profit fell 33%, and ROE dropped to 17% last year from a 3-year average of 23%. The stock's 3-year and 5-year CAGR are both -1%, so the share price has not kept pace with earnings growth over that period.
- Profit grew at a 28% CAGR over 5 years and a 27% CAGR over 3 years. Over 10 years it grew at a 25% CAGR, well ahead of 15% sales growth over the same period. This points to margin expansion and gains from high-value niche and first-to-file products.
- The company is almost debt-free. This gives it room on the balance sheet to fund R&D, Paragraph IV patent litigation, and inorganic growth without relying on leverage while earnings are under pressure.
- A P/E of 13.2 and a P/B of 1.64 are low for an Indian pharma company that has compounded profit at over 25% a year for a decade. Some of the earnings decline may already be priced in.
- Sales have grown at a steady 15% CAGR over 3, 5 and 10 years. This consistency suggests the company has repeatedly replaced maturing products with new launches.
- ROE has averaged 19% over both 5 and 10 years and 23% over 3 years. Even last year's lower figure of 17% is a healthy return on capital for the sector.
- The stock's 5-year CAGR of -1% compares with a 28% profit CAGR over the same period. The valuation multiple has compressed sharply, which reduces the risk of further de-rating from a high base.
- A market cap of about ₹14,840 crore keeps Natco a mid-sized player. Individual complex-generic or specialty launches can therefore still move consolidated earnings noticeably.
- Trailing twelve-month sales fell 21% and profit fell 33%. This is a sharp reversal from the 15% sales and 28% profit CAGR over 5 years, and suggests a key earnings driver has weakened.
- The TTM decline points to concentration risk from a small number of high-margin US generic products. As these face wider generic competition, the 27% profit CAGR over 3 years may be hard to repeat.
- ROE fell to 17% last year from a 3-year average of 23%. That is a drop of about 6 percentage points in return on capital.
- The stock's CAGR is -1% over both 3 and 5 years, and only 4% over 10 years, despite 25% annual profit growth over the decade. Earnings growth has not translated into shareholder returns.
- The tax rate appears low. If the low rate comes from incentives or one-off benefits, a return to normal tax levels could reduce reported earnings further on top of the 33% TTM profit decline.
- The 13.2 P/E is calculated on earnings that are currently shrinking 33% a year. If profits keep falling, the forward multiple could be significantly higher than the headline figure.
- A dividend yield of 0.18% gives shareholders very little income while earnings recover. Returns depend almost entirely on share price movement.
This is AI-generated analysis, not financial advice. Do your own due diligence.
AI News Digest
- Equity dilution from large fundraise Sep 30
At the 43rd AGM, shareholders approved raising up to ₹2,000 crore through a preferential or rights issue. This follows the board's Sep 9 approval of a ₹1,300 crore rights issue, so shareholders who don't subscribe face dilution.
- Demerger scheme needs revision Sep 9
The board said the proposed demerger scheme must be revised because the ₹1,300 crore rights issue changes the capital structure. That could delay the demerger timeline and keep it uncertain.
- Exchange nod for rights issue Sep 21
BSE and NSE gave in-principle approval on September 21, 2026 for the rights issue of ₹2 face value equity shares. This clears a key regulatory step before launch, and a committee led by V.C. Nannapaneni is handling the raise.
- ₹5 interim dividends confirmed Sep 30
The AGM confirmed interim dividends of ₹5.00 per share for FY26. The company is still paying shareholders while it raises capital.
- eGenesis stake rises to $24.7m Sep 28
Natco invested another $2.7m in biotech firm eGenesis through convertible notes via its US subsidiaries, taking its total stake to $24.7m. This is a small, long-dated bet on innovation with no near-term earnings impact.
- FY26 annual report filed Sep 4
Natco filed its FY2025-26 annual report with the exchanges and set its 43rd AGM for September 30, 2026, held by video conference. This is a routine compliance step.
TL;DR: Natco's September news centres on raising capital: a ₹1,300 crore rights issue that already has exchange approval, and a wider mandate to raise up to ₹2,000 crore. Dividends of ₹5 per share and continued investment in eGenesis point to steady finances and long-term growth plans. The main risks are equity dilution, an unstated use of the new funds, and delays to the demerger now that the scheme must be revised. Watch the rights issue pricing and ratio, how the funds will be used, and the revised demerger terms, since these will decide whether the raise adds value or weighs on the stock.
Quarterly Results
| Particulars | Jun 2023 | Sep 2023 | Dec 2023 | Mar 2024 | Jun 2024 | Sep 2024 | Dec 2024 | Mar 2025 | Jun 2025 | Sep 2025 | Dec 2025 | Mar 2026 | Jun 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 1,140 | 1,031 | 759 | 1,068 | 1,363 | 1,371 | 475 | 1,221 | 1,329 | 1,363 | 647 | 739 | 735 |
| Expenses | 612 | 573 | 490 | 571 | 558 | 567 | 436 | 673 | 758 | 784 | 489 | 612 | 549 |
| Operating Profit | 528 | 458 | 268 | 497 | 805 | 804 | 39 | 548 | 571 | 579 | 159 | 128 | 186 |
| OPM % | 46% | 44% | 35% | 47% | 59% | 59% | 8% | 45% | 43% | 42% | 25% | 17% | 25% |
| Other Income | 20 | 29 | 37 | 42 | 48 | 64 | 176 | 66 | 62 | 100 | 58 | 78 | 59 |
| Interest | 4 | 4 | 5 | 6 | 5 | 4 | 4 | 10 | 3 | 13 | 10 | 11 | 13 |
| Depreciation | 44 | 44 | 44 | 56 | 44 | 46 | 47 | 98 | 58 | 52 | 46 | 50 | 47 |
| PBT | 500 | 440 | 256 | 478 | 804 | 818 | 164 | 506 | 572 | 614 | 161 | 144 | 186 |
| Tax % | 16% | 16% | 17% | 19% | 17% | 17% | 19% | 20% | 16% | 16% | 13% | -62% | 34% |
| Net Profit | 420 | 369 | 213 | 386 | 668 | 676 | 132 | 406 | 480 | 518 | 151 | 269 | 206 |
| EPS in Rs | 21.42 | 18.81 | 10.84 | 19.69 | 34.07 | 34.52 | 6.78 | 20.72 | 24.5 | 26.42 | 7.72 | 13.65 | 10.52 |
Profit & Loss
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 | TTM |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 825 | 1,042 | 2,020 | 2,185 | 2,094 | 1,915 | 2,052 | 1,945 | 2,707 | 3,999 | 4,430 | 4,078 | 3,485 |
| Expenses | 615 | 777 | 1,337 | 1,256 | 1,300 | 1,332 | 1,446 | 1,681 | 1,772 | 2,245 | 2,234 | 2,617 | 2,433 |
| Operating Profit | 210 | 266 | 683 | 928 | 795 | 583 | 606 | 264 | 936 | 1,754 | 2,196 | 1,462 | 1,052 |
| OPM % | 25% | 25% | 34% | 42% | 38% | 30% | 30% | 14% | 35% | 44% | 50% | 36% | 30% |
| Other Income | 0 | 12 | 14 | 40 | 130 | 107 | 104 | 99 | 105 | 126 | 354 | 272 | 295 |
| Interest | 32 | 23 | 18 | 15 | 19 | 22 | 13 | 18 | 14 | 19 | 24 | 37 | 46 |
| Depreciation | 47 | 51 | 54 | 66 | 81 | 100 | 117 | 143 | 164 | 187 | 235 | 207 | 196 |
| PBT | 132 | 204 | 624 | 887 | 825 | 569 | 580 | 202 | 862 | 1,674 | 2,291 | 1,491 | 1,104 |
| Tax % | 1% | 24% | 22% | 22% | 22% | 19% | 24% | 16% | 17% | 17% | 18% | 8% | — |
| Net Profit | 130 | 156 | 485 | 695 | 642 | 458 | 442 | 170 | 715 | 1,388 | 1,883 | 1,418 | 1,145 |
| EPS in Rs | 7.4 | 8.23 | 25.46 | 34.45 | 32.17 | 23.11 | 22.08 | 8.5 | 35.78 | 70.76 | 96.1 | 72.3 | 58.31 |
| Div. Payout % | 12% | 14% | 24% | 22% | 18% | 27% | 22% | 48% | 14% | 12% | 6% | 6% | — |
Balance Sheet
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity Capital | 33 | 35 | 35 | 37 | 36 | 36 | 36 | 36 | 36 | 36 | 36 | 36 |
| Reserves | 813 | 1,261 | 1,614 | 3,035 | 3,452 | 3,737 | 4,085 | 4,227 | 4,837 | 5,817 | 7,571 | 9,185 |
| Borrowings | 312 | 113 | 222 | 173 | 386 | 316 | 268 | 416 | 167 | 371 | 279 | 714 |
| Other Liabilities | 226 | 413 | 446 | 470 | 428 | 498 | 403 | 430 | 617 | 682 | 744 | 1,138 |
| Total Liabilities | 1,384 | 1,822 | 2,318 | 3,715 | 4,303 | 4,588 | 4,792 | 5,109 | 5,657 | 6,906 | 8,631 | 11,074 |
| Fixed Assets | 710 | 710 | 833 | 1,019 | 1,227 | 1,584 | 2,023 | 2,312 | 2,427 | 2,491 | 2,698 | 2,803 |
| CWIP | 129 | 212 | 336 | 480 | 638 | 518 | 223 | 130 | 64 | 137 | 225 | 294 |
| Investments | 2 | 22 | 32 | 76 | 169 | 112 | 304 | 308 | 392 | 539 | 474 | 3,127 |
| Other Assets | 543 | 878 | 1,116 | 2,140 | 2,270 | 2,373 | 2,242 | 2,360 | 2,774 | 3,739 | 5,234 | 4,850 |
| Total Assets | 1,384 | 1,822 | 2,318 | 3,715 | 4,303 | 4,588 | 4,792 | 5,109 | 5,657 | 6,906 | 8,631 | 11,074 |
Cash Flow
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating | 93 | 112 | 346 | 464 | 669 | 417 | 299 | 46 | 849 | 1,212 | 1,697 | 1,768 |
| Investing | -120 | -176 | -299 | -1,116 | -611 | -175 | -107 | 4 | -465 | -1,026 | -1,436 | -1,987 |
| Financing | 29 | 154 | -48 | 651 | -51 | -251 | -186 | 35 | -363 | -247 | -211 | 298 |
| Net Cash Flow | 2 | 90 | -1 | -2 | 7 | -8 | 6 | 85 | 21 | -62 | 50 | 79 |
| Free Cash Flow | -25 | -44 | 66 | 57 | 225 | 81 | 92 | -142 | 674 | 855 | 1,300 | 1,379 |
| CFO/OP | 55 | 60 | 69 | 72 | 107 | 90 | 71 | 36 | 110 | 85 | 94 | 148 |
Ratios
| Particulars | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 | Mar 2025 | Mar 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debtor Days | 85 | 92 | 86 | 106 | 88 | 105 | 73 | 116 | 115 | 109 | 103 | 79 |
| Inventory Days | 331 | 482 | 213 | 389 | 545 | 534 | 570 | 496 | 432 | 357 | 405 | 480 |
| Days Payable | 189 | 372 | 160 | 239 | 224 | 244 | 104 | 105 | 153 | 120 | 145 | 216 |
| Cash Conversion Cycle | 228 | 202 | 138 | 257 | 410 | 395 | 539 | 507 | 394 | 345 | 362 | 343 |
| Working Capital Days | 25 | 97 | 71 | 215 | 207 | 295 | 246 | 256 | 198 | 151 | 151 | 111 |
| ROCE % | 17% | 18% | 39% | 35% | 23% | 14% | 13% | 4% | 18% | 30% | 33% | 17% |
Insights
BetaAI-extracted from concalls & annual reports · figures as reported, with sources
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Company Information
NATCO Pharma Limited (NATCO) is a vertically integrated, research and development focused pharmaceutical company engaged in developing, manufacturing, and marketing complex products for niche therapeutic areas. [1] NATCO has established its presence in all three business segments viz. finished dosage formulations (“FDF”), active pharmaceutical ingredients (“APIs”), Contract Manufacturing Business.[2]
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