Natco Pharmaceuticals Q3FY15 Research Report By Edelweiss

Outlook & Valuation: Natco Pharmaceuticals Ltd (NPL) reported a topline of INR 195.5 crs which was 5.8% below our estimate of INR 207.5 crs. This was mainly on account of 44% YoY de-growth witnessed in the export formulations segment led by absence of sales from the Venezuelan tender business. During the quarter, the company paid a one time settlement of INR 15.1 crs to SMS Pharma, resulting in PAT of INR 13.7 crs. Adjusting for the same, the company reported an adjusted PAT of INR 29.5 crs, lower than our estimate of INR 32.0 crs. The domestic oncology formulations segment continued to show good traction, registering a growth rate of ~28% YoY. The management has indicated for key product launches in FY 16E across various markets, which is expected to substantially boost growth momentum going forward. We believe that the company has a very impressive pipeline in the US, which is expected to contribute substantially to the company’s future growth and margins. We maintain our “BUY” recommendation.

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