ICICI Direct's research report on Natco Pharma
Revenues de-grew 8.6% YoY to Rs 492.3 crore (I-direct estimate: Rs 608.2 crore) mainly due to 14.1% decline in domestic formulations to Rs 164 crore. Export business grew 2.1% YoY to Rs 241 crore (I-direct estimate: Rs 262.1 crore). EBITDA margins contracted 154 bps to 38.9% (I-direct estimate: 43.3%) mainly due to high employee cost. EBITDA de-grew 12.1% YoY to Rs 191.3 crore against I-direct estimate of Rs 263.5 crore. Net profit de-grew 21.1% YoY to Rs 143.2 crore (I-direct estimate: Rs 195.4 crore). Delta vis-à-vis EBITDA was mainly due to higher depreciation and financial cost.
Outlook
We value the stock on an SOTP basis. Accordingly, we arrive at our new target price of Rs 595, which includes base business value of ~Rs 397 (15x FY21E EPS of Rs 26.4) + Rs 198 for NPV of FTF/Para IVs in the US.
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