Скачать или смотреть 139% profit growth but stock undervalued?! Natco fundamental analysis

Welcome to Bottomline by Groww. In this video, we break down Natco Pharma’s strengths, risks and future bets for investors seeking value in the pharma space. Natco trades at a bargain P/E of 8.7× versus its long-term average of 19.5× and the industry average of 33.8×. What this really means is you’re getting a high-value generics specialist and oncology player at a discount. Operating margins have surged from around 30 percent to nearly 50 percent over five years, reflecting lean operations and a focus on specialty molecules.

Let’s break it down. We explore Natco’s API business—its raw drug building blocks—and its formulations segment, which drives 87 percent of revenue through complex generics like gRevlimid. We unpack how first-to-file US launches powered a 15 percent YoY uptick in formulations sales and why a patent cliff on gRevlimid in late FY 26 could trigger a 20 percent revenue drop and a 30 percent profit hit.

Here’s the thing: Natco’s balance sheet is virtually debt-free, with a debt-to-equity ratio of 0.04 and a cash war chest exceeding ₹3,500 crore. Yet inventory days have stretched past a year, creating a 362-day cash conversion cycle. We also touch on currency headwinds, domestic pricing pressure and the sharp 45 percent decline in its Crop Health Sciences vertical.

What makes this story compelling is the roadmap beyond gRevlimid. We highlight two high-potential launches—Risdiplam and Semaglutide—slated for rare diseases and metabolic disorders, plus 28 Para IV filings in the US with 13 FDA approvals so far, securing exclusive six-month windows. Management’s plan for strategic acquisitions and next-generation R&D in cell and gene therapies rounds out the long-term play.

If you’re into value investing, oncology generics, active pharma ingredients or mid-cap pharma stories, this financial analysis and investment strategy session offers actionable insights on risk management, growth catalysts and portfolio diversification. Ready to decide if Natco Pharma is a hidden gem or a headwind trap? Watch now, share your take and subscribe for more deep dives on promising stocks.

Time Stamps:
00:00 – Disclaimer
00:05 – Introduction
00:56 – How the business works
03:58 – Balance-sheet strength
04:30 – Key risks and challenges
06:14 – Mitigation strategies
07:42 – Final takeaways
08:40 – Outro

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Name of the Research Analyst - Aakash Baid
Name of the Creator - Radhika Bajaj
Date of Report: June 21, 2025
RA link - https://groww.in/pages/sebi-research-...