Geojit Financial Services
Natco Pharma (Sell)
CMP: ₹562.65
Target: ₹534
Nacto Pharma is an R&D focussed, vertically integrated pharmaceutical company with an experienced management team and presence across multiple speciality therapeutic segments.
Key takeaways: a) Total revenues declined by 11.6 per cent with sales of formulations degrowing by 19.7 per cent on a y-o-y basis.
b) Net profit was down 34.5 per cent y-o-y as other expenses included a one-time provision of ₹15 crore for bad debts.
c) The launch of Revlimid will be dependent on the court trial that will take place in Canada during the month of March
d) Key drivers of revenue in FY20E-FY22E will be India, Brazil and Canada.
We revise downward our revenue estimates by 15 per cent/18 per cent for FY20/21E while the PAT estimate by 18 per cent in both FY20 and FY21 to factor ongoing downtrend in earnings.
We value at 15x on FY22E EPS and retain the Sell rating with a revised target price of ₹534.
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