Natco Pharma is a kind of company that I like to stay invested in… I sleep easy when my capital is invested in it. Granted that it went through a 7 year period of no returns but that happens in every stock/companys evolution. Many have burnt hands investing in it during its stagnation, myelf included, where it was taking it time evolving into a serious disruptor in the complex generics space…
Their recent investment in domestic CART cell therapy company is a testament to the razor sharp focus of the promoter management of the company to be in the cutting edge of cancer treatment… the only critiism it merits is maybe the equity percentage they went for was a tad less…but they did say they have an option of increasing their investment so lets see how it goes… their unflinching resolve to plough back 8 to 10 percent of their standalone revenues into Research & Development makes their commitment to being serial disruptors a serious one…
The promoters appear to be mindful of what the overwhelming majority of investment pundits point out is the inability of projecting it future growth and thereby not being able to proscribe a partiular PE valuation to the company hence they have listed out a bevy of sustainable growth drivers of the coming future:
- growing their fledgling domestic agro chemical division
- launching more products in their foreign subisdiaries and creating new subidiaries in RoW growth markets, thereby getting access to more markets
- Increasing Para IV filings inorder toget more and more Para IV approvals, so much so, that routinely every other year they get to launch one or two products
- focusing to grow domestic business (this was hit hard due to price capping)
- brownfield acquisition… very tactfully they have given themselves 2 years time to make the acquisition to be in time to set off the falling gRevlimid topline impact…
Over and above this I wish they get their act together on their API exports which have been stagnating for the past 3 years…
The management has guided for a solid 20% growth on the back of a high base and Q1 result in the weeks ahead will dispel worries on that front… retail public holds some 25% of natco pharma equity and DIIs continue to reduce stake… this I think is most unfortunate… In the end market is always right, this however, is just the beginning for Natco 2 point O, what do you say?
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