ICICI Direct's research report on Natco Pharma
Q2FY21 revenues grew an exceptional 65.2% YoY to Rs 802 crore on the back of 91.3% YoY growth in export formulations to Rs 482 crore and 193.7% growth in APIs to Rs 200 crore. Domestic formulations de-grew 11.2% YoY to Rs 108 crore due to continued impact on Hep-C sales and oncology segment due to lower hospitalisation rate amid the pandemic. EBITDA margins improved 680 bps YoY to 34.5% due to better operating leverage. Hence, EBITDA grew 105.8% YoY to Rs 276 crore. PAT grew 70.1% YoY to Rs 202.4 crore. Delta vis-a-vis EBITDA was due to lower other income and higher tax rate (24.7% vs 15.6% in Q2FY20).
Outlook
We ascribe a target price of Rs 970, which includes base business value of ~Rs 676 (25x FY23E EPS of Rs 27.0) + Rs 294 for NPV of FTF/Para IVs in US. Given the recent run-up besides impending TAD for gRevlimid approval, we change our stance to HOLD.
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