ICICI Direct has given Hold recommendation for Natco Pharma with a target price of Rs. 1010 in its research report issued on Jun 18, 2021
ICICI Direct’s research report on Natco Pharma
Natco’s Q4FY21 revenues de-grew 27.2% YoY to Rs 331.3 crore due to decline across verticals. Export formulations declined 27.6% YoY to Rs 158.8 crore due to significant drop in gTamiflu sales. Domestic formulations degrew 20.3% to Rs 81.8 crore amid a sharp fall in oncology sales. API business declined 26.6% YoY Rs 70.8 crore. EBITDA margins contracted 521 bps YoY to 23%, mainly due to higher employee cost. EBITDA fell 40.6% YoY to Rs 76.2 crore. Ensuing PAT declined 43.7% YoY to Rs 53 crore.
Outlook
We ascribe a target price of Rs 1010 (earlier Rs 885), which includes base business value of ~Rs 815 (35x FY23E EPS of Rs 23.3) + Rs 195 for NPV for gRevlimid. We maintain HOLD.