Natco Pharma Shares Plunge 19% After Disappointing Q3 FY25 Earnings

Natco Pharma shares fell 19% on February 13 after its Q3 FY25 earnings showed a 37.75% drop in net profit and a 37.4% decline in revenue. The EBITDA margin plunged due to a sharp fall in export formulation sales, worsened by the absence of key revenue driver Revlimid. Despite the slump, analysts see long-term growth potential with upcoming product launches.

Natco Pharma Shares Plunge 19% After Disappointing Q3 FY25 Earnings

Natco Pharma’s shares took a heavy hit on February 13, tumbling as much as 18.5% after the company’s Q3 earnings report disappointed investors. The stock has now lost 25% of its value over the past five sessions.

The pharmaceutical firm’s net profit for the quarter plunged 38% year-on-year to ₹132.4 crore, down from ₹212.7 crore in the same period last year. Revenue also saw a steep decline of over 37%, falling to ₹474.8 crore from ₹758.6 crore.

Operational performance weakened significantly, with the EBITDA margin dropping by 2,717 basis points to 8.2% in Q3, compared to 35.3% in the previous year. A major factor behind the poor results was a sharp decline in formulation exports, which fell more than 50% to ₹285.8 crore from ₹605.6 crore a year earlier. Domestic formulation sales also slipped slightly to ₹96.1 crore from ₹99.4 crore.

Export formulations, which accounted for 44% of Natco Pharma’s total revenue in Q3, were a key contributor to the downturn. In FY24, they made up 76% of the company’s total sales, while domestic formulations contributed 9%.

At 9:55 AM, Natco Pharma shares were trading at ₹1,012.50 on the NSE. The stock’s continued decline was accompanied by a surge in trading volumes, with around 24 lakh shares changing hands—nearly five times the one-month daily average of five lakh shares.

Natco Pharma shares plummeted 19% on February 13 following the release of its Q3 FY25 earnings report, which revealed significant declines in revenue, profit, and operational performance.

The company reported a 37.75% year-on-year (YoY) drop in net profit, falling to ₹132.4 crore from ₹212.7 crore in the same quarter last year. Consolidated revenue from operations also declined 37.4% YoY to ₹474.8 crore from ₹758.6 crore.

The most significant hit was seen in EBITDA, which plunged 85.5% YoY to ₹38.8 crore from ₹268.1 crore, resulting in a sharp contraction in EBITDA margin to 33%, compared to 38.3% in Q3 FY24 and 60.5% in the previous quarter.

A key reason for this downturn was the sharp decline in the export formulation business, the company’s largest revenue source. Export formulation sales nearly halved to ₹285.8 crore from ₹605.6 crore in Q3 FY24, while domestic formulation revenue remained relatively stable at ₹96.1 crore compared to ₹99.4 crore last year. The absence of Revlimid, a key revenue driver, further exacerbated the decline.

Despite the sharp drop, analysts note that Natco Pharma remains a strong industry player with a vertically integrated structure and R&D-driven approach. The company has several key product launches planned over the next five years, which are expected to drive revenue and profitability growth from FY26 onwards.

Following the earnings release, Natco Pharma’s stock hit a low of ₹986 on the BSE but later recovered slightly to trade at ₹1,008.65, down 17% by 10 AM. While the stock has fallen 17% in a month and 32% over six months, it has still gained 22% over the past year.

Dividend Announcement

The company also declared an interim dividend of ₹1.50 per share, with the record date set for February 18, 2025, and dividend payments starting from February 28, 2025.