Natco Pharma Research Report By Nirmal Bang

There Is Life Beyond Copaxone We continue to believe in Natco Pharma’s (NPL) strength in base business in which it may be able to maintain a healthy growth rate on the oncology side and also the nononcology business growth expected to get a boost from the recent approval granted for the generic version of Sovaldi for Indian market, which is likely to be launched in 1QFY16 (launched in Nepal in 4QFY15). However, we are more excited about its strong US drug pipeline and do not see any risk to earnings over the next four-five years on the back of higher visibility emerging for products like Tamilfu, which is now having a higher chance of being launched in September 2016. Despite the sharp run-up in share price of NPL in the past few days, we continue to believe in its long-term growth. Accordingly, we have assigned Accumulate rating to the stock after downgrading it (from Buy earlier) with a target price of Rs2,262, valuing its base business (including generic Copaxone tablets) at 17x FY17E EPS and including Rs222 for the Para-IV pipeline.

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