Natco Pharma hits 52-week low on disappointing December earnings

Natco Pharma's formulations facility in Kothur
Shares of Natco Pharma hit a 52-week low of Rs 620 apiece, down 7 per cent on the BSE in early morning trade, after the company reported 27 per cent drop in consolidated net profit at Rs 159 crore for the quarter ended December 2018 (Q3FY19).  The pharmaceutical company had posted a profit of Rs 217 crore in a year-ago quarter.

Operational revenue declined 1 per cent to Rs 557 crore against Rs 562 crore in the corresponding quarter of previous fiscal. Ebitda (earnings before interest, taxation, depreciation and ammortisation) margin declined to 37.4 per cent from 50.9 per cent in the previous year quarter.

Natco Pharma said the decline in the profits during the quarter compared to last year was predominantly due to margin reduction of Oseltamivir in the USA market.

The brokerage firm Nirmal Bang Securities expected a profit of Rs 179 crore and Ebitda margin 40.2 per cent for the quarter.

Post-September quarter (Q2FY19) results, since November 5, 2018, Natco Pharma has underperformed the market by falling 20 per cent, against 3.5 per cent rise in the S&P BSE Sensex. The S&P BSE Healthcare index was down 5 per cent during the same period.

While the easing pricing environment in the US and volume share gains due to easing competition from US incumbents has made the US focused pharma companies re-rate, analysts at Antique Stock Broking believe that earnings estimates for several companies are still at risk.

With no big launches until gRevlimid in end-FY22, investor concerns lie around the sustainability of the current earnings considering that the best of gTamiflu dynamics are behind the company, the brokerage firm said in company update report on November 28.

At 11:06 am, Natco Pharma was trading 5 per cent lower at Rs 636 on the BSE, as compared to 0.43 per cent rise in the Sensex. A combined 200,797 equity shares changed hands on the counter on the NSE and BSE so far.

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