Natco Pharma hits new high; up 80% in 2017

The stock hit a new high of Rs 1,054, up 3%, extending its 15% gain in past eight trading sessions.

Natco Pharma hit a new high of Rs 1,054, up 3% on the BSE extending its 15% gains of the last eight trading sessions after the company reported a good set of numbers for the quarter ended March 2017 (Q4FY17).

Natco Pharma registered a nearly three-fold growth in consolidated net profit at Rs 176 crore in Q4FY17 against Rs 63 crore posted in the corresponding quarter of the previous year.

The company's consolidated revenues increased 46% to Rs 577 crore in the fourth quarter under review as compared to Rs 395 crore in the year ago period.

For financial year 2016-17 (FY17), the company’s net profit grew three times at Rs 485 crore from Rs 156 crore in the previous year. Its overall revenues have doubled to Rs 2,079 crore.

Ebitda (earnings before interest, tax, depreciation and amortization) margin improved 820 bps to 33.5% in FY17 from 25.3% in FY16.

Given Natco Pharma’s strong US pipeline, foray into the fast-growing cardio-diabetology division, Hepatitis C underpenetration in India & EMs and leadership in oncology, analyst at Antique Stock Broking believe Natco is best placed to counter headwinds that several of its peers are facing.

The brokerage firm initiate on a BUY recommendation and a target price of Rs 1,175 as it believe Natco should trade near the top of the sector’s trading range considering the niche business and revenue visibility which is likely to yield mid-teens earnings growth beyond FY19.

At 10:29 am; the stock was up 2.5% at Rs 1,048 on BSE, as compared to 0.13% decline in the S&P BSE Sensex. A combined 315,696 shares changed hands on the counter on BSE and NSE so far.

Thus far in the calendar year 2017, the stock zoomed 80% from Rs 581, against 17% rise in the benchmark index.