Natco Pharma Ltd (NATCOPHARM) Q1 FY27 Results Analysis: Normalized PAT Surges 34%, Base Business Grows 18%

Natco Pharma Ltd's Q1 FY27 numbers came in mixed, with revenue of Rs. 735.20 Cr (-44.70% YoY) and PAT growth of -57.00% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Revenue fell 44.7% YoY as expected from Revlimid exclusivity loss, but base business grew 17.7% YoY (above guided 10-15%) and normalized PAT improved 34.1% QoQ. Associate profit from Adcock Ingram provided a new earnings driver, and the EBITDA margin rebounded sequentially to 30.9%. The company's FY27 guidance remains on track, though the standalone entity is under pressure.

Key Investment Insights

Key Positives

• Non-international business (API, Domestic Formulations, Crop Health Sciences) grew 17.7% YoY, exceeding the 10-15% guided range.
• Normalized PAT improved 34.1% QoQ to Rs.206.5 Cr when adjusting for the one-time Q4 deferred tax credit.
• EBITDA margin improved sequentially from 25.1% to 30.9%, demonstrating operating leverage.
• Associate profit from Adcock Ingram contributed Rs.84.3 Cr, diversifying earnings away from the Revlimid dependency.
• Interim dividend of Rs.1.50 per share declared.

Risk Factors

• Revenue declined 44.7% YoY due to the expected loss of Revlimid exclusivity, highlighting the revenue cliff.
• PAT to owners fell 57% YoY to Rs.206.5 Cr.
• Finance costs surged 306% YoY to Rs.13.0 Cr due to debt taken on for the Adcock Ingram acquisition.
• Standalone PAT declined 83.9% YoY to Rs.74.6 Cr, showing the parent entity's reliance on subsidiary contributions.