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Natco Pharma dips 12% in two days post Q1 results on profit booking

SI Reporter/Mumbai 09 Aug 17 | 12:32 PM

Natco Pharma dipped 8% to Rs 856, extending Tuesday’s 4% decline on BSE, on profit booking after the company’s net profit nearly doubled at Rs 93.7 crore for the quarter ended June, 2017 (Q1FY18). The company had posted a profit of Rs 47.5 crore in the corresponding period previous year.

The consolidated revenue for the quarter grew 30% to Rs 449 crore as compared to Rs 346 crore in the year ago period.

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So far in 2017, the stock of pharmaceutical company had outperformed the market by gaining 65% till Monday. On comparison, the S&P BSE Sensex was up 21%, while S&P BSE Healthcare index was down 6% during the period.

“Natco Pharma posted a strong 1Q, mainly boosted by one-off revenue from sales of gTamiflu in the US, which generated Rs 72 crore of income during the quarter. However, ex-gTamiflu, business was moderate (around 10% yoy growth). Domestic business faced temporary disruptions in trade amid the implementation of Goods and Service Tax (GST) and recorded around 20% yoy decline," analyst at Systematix Institutional Equities said in result update.

In view of weaker India sales in 1Q, the brokerage firm have marginally fine tuned the estimates and curtailed the target price to Rs 1,016 (earlier Rs 1,061).

Analyst at Antique Stock Broking sees limited revenue pressure in the coming quarters, with domestic business picking up in Q2FY18 incl. traction in Epclusa and increasing contribution from gDoxil and gVidaza.

The brokerage firm remains positive on Natco given the visibility in US pipeline, the oligopolistic nature of its domestic portfolio and foray into the fast-growing cardio-diabetology segment.

“We make modest changes to our numbers as we push back gTracleer to FY19 and reduce our domestic growth to 12% for FY18. We retain our BUY call and target price of Rs 1,160 (from 1,175)," analyst said in result review.

At 12:29 pm, the stock was down 6.6% to Rs 864 on BSE, as compared to 0.33% decline in Sensex. A combined 473,821 shares changed hands on the counter on BSE and NSE.

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