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Buy Natco Pharma; target of Rs 704: Geojit

Geojit is bullish on Natco Pharma has recommended buy rating on the stock with a target price of Rs 704 in its research report dated December 05, 2022.

December 05, 2022 / 12:26 PM IST
 
 
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Geojit's research report on Natco Pharma

NATCO Pharma (NATCO) is an India-based vertically integrated and R&D focused enterprise, engaged in developing, manufacturing and marketing finished dosage formulations and active pharmaceutical ingredients and intermediates. Natco witnessed 67% revenue growth in H1FY23, owing to robust Revlimid sales. EBITDA margins expanded 1436bps to 37% in H1FY23 from 23% in H1FY22 led by strong contribution from export formulations. Export formulation business registered a 204% growth in H1FY23 with revenues at Rs. 1020 cr. Brazilian and Canadian subs, backed by strong new launches, have reported robust growth with 40-50% share in profitability. In the Crop Health Science Division, the CTPR (Chlorantraniliprole) associated products which were launched are expected to drive earnings in the near-term. We remain optimistic on Natco’s future profitability backed by the traction in CTPR and Revlimid sales and recovery in domestic formulation.

Outlook

Hence, we upgrade our rating to a Buy with a target price of Rs.704 based on 16x FY24E EPS.