ICICI Securities research report on Natco Pharma
Natco’s Q4FY25 result was driven by better traction in gRevlimid and the momentum is likely to continue for next couple of quarters. It has cash balance of INR 35bn which it plans to deploy towards R&D (INR 4bn p.a), capacity expansion (INR 3bn p.a.) and in pursuing inorganic opportunities. Beyond gRevlimid opportunity, Natco expects its residual business revenue to grow 7-10%; launch of Semaglutide and Risdiplam may be one of the key growth drivers for the company in India and US markets. Owing to competitive pressure in gRevlimid, management has guided for 20%/30% decline in revenue/ profit in FY26.
Outlook
We lower rating to HOLD, revise TP to INR 890 on 18x FY27E EPS of core biz, NPV of INR 100 for exclusive products and INR 220 for cash.
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