Natco Pharma Declares 75% Dividend After Strong Q2 Earnings
Despite market volatility, Natco Pharma rewarded its shareholders by announcing a 75% interim dividend following a robust 83% jump in net profit for Q2 FY25. The company credited its export formulation business and strong domestic sales for the outstanding performance.
Q2 FY25 Key Financial Highlights:
Net Profit: ₹676 crore (up 83% YoY) from ₹369 crore in Q2 FY24.
Revenue: ₹1,371 crore (up 32.93% YoY) from ₹1,031 crore last year.
Dividend Announced: ₹1.50 per share (75%) on ₹2 face value shares.
Record Date for Dividend: November 25, 2024 (Payout starts from December 2, 2024).
Natco Pharma’s board emphasized that the export-driven formulation business played a crucial role in boosting profits.
Natco Pharma Shares Plummet 20% Post Disappointing Q3 Results
Just when investors were celebrating strong Q2 earnings, Natco Pharma’s stock crashed 20% on February 13 after the company reported weaker-than-expected Q3 FY25 financials.
Q3 FY25 Key Financial Breakdown:
Revenue Decline: ₹651.1 crore, down 18.16% YoY from ₹795.6 crore.
EBITDA Crash: ₹215.1 crore, down 29.49% YoY from last year.
EBITDA Margin Shrinks: Down from 38.3% in Q3 FY24 to 33% in Q3 FY25.
The sharp decline in revenue and profit triggered massive selling pressure on Natco Pharma’s stock, with shares hitting ₹975, reflecting a 19.86% drop in a single session.
Stock Market Impact:
Shares fell below all key moving averages, including 5-day, 10-day, and 200-day SMAs.
14-day RSI hit 28.59, signaling oversold conditions.
2.15 lakh shares traded, compared to the 2-week average of just 28,000 shares.
Market cap now at ₹17,542 crore, with turnover of ₹21.66 crore.
Why Did Natco Pharma’s Q3 Earnings Disappoint?
According to industry experts, the primary reason for the weak Q3 numbers was the decline in export formulations, especially following the loss of Revlimid, one of its key revenue drivers. Additionally, domestic formulation sales underperformed, further denting overall profitability.
What Experts Say About Natco Pharma’s Future?
“Despite a weak Q3, Natco Pharma remains a strong player due to its niche products and vertically integrated business model. The company has multiple key product launches planned in the next five years, which are expected to drive strong revenue and profitability from FY26 onwards.”
– Prathamesh Masdekar, Research Analyst, StoxBox
Should Investors Buy, Hold, or Sell Natco Pharma Shares?
After this mixed performance, the big question for investors is whether to buy, hold, or exit Natco Pharma stock.
For Long-Term Investors: The company has a strong product pipeline, which could boost profitability in the coming years. A buy-on-dip strategy could work for those with a long-term horizon.
For Short-Term Traders: The stock is currently in a bearish phase, trading below key moving averages. Further downside is possible if selling pressure continues.
For Dividend Seekers: The company has already announced a 75% dividend, with a record date of November 25, 2024. This makes it attractive for income-focused investors.
Now What’s Next for Natco Pharma?
While short-term headwinds exist, Natco Pharma’s long-term growth story remains intact. The company’s global expansion strategy and upcoming product launches could help it regain lost ground.
Short-Term View: Expect volatility. Weak Q3 earnings could keep stock under pressure.
Long-Term View: Strong fundamentals, promising product pipeline, and consistent dividend payouts make it a potential long-term bet.
