Check Before You Invest : Natco Pharma Ltd

Q: Which industry/sub-sector does Natco Pharma Ltd belong to?

Natco Pharma Ltd belongs to the Healthcare sector, operating specifically within the Pharmaceuticals & Drugs segment.

Q: Is Natco Pharma Ltd a good quality company?

Natco Pharma Ltd is a good quality company, based on a consistently good multi-year financial track record. This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q: Is Natco Pharma Ltd undervalued or overvalued?

Natco Pharma Ltd appears Somewhat Undervalued, as its key valuation ratios are lower than their past averages. Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more. Valuation Ratios. Price to Earnings, Current: 13.49, Historic Median: 17.02. Price to Book, Current: 2.39, Historic Median: 2.59. Price to Sales, Current: 4.61, Historic Median: 4.44. EV to EBITDA, Current: 8.66, Historic Median: 9.69

Q: Is Natco Pharma Ltd a good buy now?

Natco Pharma Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Q: Revenue growth of Natco Pharma Ltd?

Natco Pharma Ltd revenue growth is 10.8% for FY-2025, which is below its 5-year CAGR of 18.26%, indicating slower growth.

Q: Gross Profit margin of Natco Pharma Ltd?

Natco Pharma Ltd Gross profit margin which is the profit after deduction of direct costs, is 53% for FY-2025, which is above its 5-year median of 35.6%, indicating increasing margins.

Q: Operating Profit Margin of Natco Pharma Ltd?

Natco Pharma Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 49.53% for FY-2025, which is above its 5-year median of 33.87% indicating increasing margins.

Q: Net Profit Margin of Natco Pharma Ltd?

Natco Pharma Ltd Net Profit Margin is 42.52% for FY-2025, is above its 5-year median of 26.42%, indicating increasing margins. Profitability Metrics. Gross Profit Margin (%), Current: 53, Historic Median: 35.6. Operating Profit Margin (%), Current: 49.53, Historic Median: 33.87. Net Profit Margin (%), Current: 42.52, Historic Median: 26.42

Q: Return on Asset of Natco Pharma Ltd?

Natco Pharma Ltd Return on Asset is 24.35%, which is above its 5-year historical median of 13.29%, indicating improved asset utilization efficiency.

Q: Return on capital employed (ROCE) of Natco Pharma Ltd?

Natco Pharma Ltd Return on capital employed is 32.85% for FY-2025, which is above its 5-year historical median of 18.06%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 13.5%, indicating value creation.

Check Before You Invest : Natco Pharma Ltd

Snapshot

Q.1 Which industry/sub-sector does Natco Pharma Ltd belong to?

Natco Pharma Ltd belongs to the Healthcare sector, operating specifically within the Pharmaceuticals & Drugs segment.

Q.2 Is Natco Pharma Ltd a good quality company?

Natco Pharma Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Natco Pharma Ltd undervalued or overvalued?

Natco Pharma Ltd appears Somewhat Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios	Current	5-year Historic Median
Price to Earnings	13.49	17.02
Price to Book	2.39	2.59
Price to Sales	4.61	4.44
EV to EBITDA	8.66	9.69

Q.4 Is Natco Pharma Ltd a good buy now?

Natco Pharma Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

How has it performed on generating Profits?
By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.
How efficiently has it utilized Capital?
By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.
How is it managing its Debt?
By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Natco Pharma Ltd?

Natco Pharma Ltd revenue growth is 10.8% for FY-2025, which is below its 5-year CAGR of 18.26%, indicating slower growth.

Q.2 Gross Profit margin of Natco Pharma Ltd?

Natco Pharma Ltd Gross profit margin which is the profit after deduction of direct costs, is 53% for FY-2025, which is above its 5-year median of 35.6%, indicating increasing margins.

Q.3 Operating Profit Margin of Natco Pharma Ltd?

Natco Pharma Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 49.53% for FY-2025, which is above its 5-year median of 33.87% indicating increasing margins.

Q.4 Net Profit Margin of Natco Pharma Ltd?

Natco Pharma Ltd Net Profit Margin is 42.52% for FY-2025, is above its 5-year median of 26.42%, indicating increasing margins.

	Current Level	5-year Historic Median
Gross Profit Margin (%)	53	35.6
Operating Profit Margin (%)	49.53	33.87
Net Profit Margin (%)	42.52	26.42

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Natco Pharma Ltd?

Natco Pharma Ltd Return on Asset is 24.35%, which is above its 5-year historical median of 13.29%, indicating improved asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Natco Pharma Ltd?

Natco Pharma Ltd Return on capital employed is 32.85% for FY-2025, which is above its 5-year historical median of 18.06%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 13.5%, indicating value creation.

Q.7 Return on Equity (ROE) of Natco Pharma Ltd?

Natco Pharma Ltd Return on equity is 27.98% for FY-2025, which is above its 5-year historical median of 15.66%, indicating the business is making better use of its shareholders capital.

Q.8 Cash conversion cycle of Natco Pharma Ltd?

Natco Pharma Ltd Cash conversion cycle is 105 days, below its 5-year historical median of 145 days, indicating improved working capital management. However, you need to compare this with its peers in the industry.

	Current Level	5-year Historic Median
Asset Turnover (x)	0.62	0.54
ROE (%)	27.98	15.66
ROCE (%)	32.85	18.06
Cash Conversion Cycle	105 days	145 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Natco Pharma Ltd?

Natco Pharma Ltd Debt-to-Equity ratio is 0.04, which is lower the industry average of 0.14, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of Natco Pharma Ltd?

Natco Pharma Ltd Debt to cash flow from operations is 0.16, which is at a healthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Natco Pharma Ltd?

Q.1 Promoter shareholding and pledge status of Natco Pharma Ltd?

Promoters hold 49.42% of the Natco Pharma Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Natco Pharma Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Natco Pharma Ltd vs industry peers?

Natco Pharma Ltd revenue CAGR is 18.26%, compared to the industry median CAGR of 5.35%, indicating faster growth and gaining its market share.

Profit Metrics

	Current Level	5-year Industry Median
Revenue Growth (%)	10.8	5.4
Gross Profit Growth (%)	35.9	14
Operating Profit Growth (%)	25.3	11.5
Net Profit Growth (%)	35.7	12

Operating Efficiency

	Current Level	5-year Industry Median
Asset Turnover (x)	0.62	0.79
ROE (%)	27.98	9.17
ROCE (%)	32.85	11.52
Cash Conversion Cycle (days)	105.13	76

Valuation & price assessment

Q.1 Stock return of Natco Pharma Ltd over the last decade?

Over the last 9 year(s), the stock has delivered a CAGR of 10% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	10%	3.5%	23.8%	33.9%

Q.2 Valuation ratios of Natco Pharma Ltd vs historical?

The current P/E ratio of 13.49 is lower than its historical median of 17.02, indicating that the stock is trading below its historical average valuation.

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	13.49	17.02	31.09
Price to Book	2.39	2.59	2.85
Price to Sales	4.61	4.44	2.82
EV to EBITDA	8.66	9.69	15.99

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Check Before You Invest : Natco Pharma Ltd

Snapshot

Performance Analysis

Ownership & governance

Peer comparison (industry-wise, mcap)

Profit Metrics

Operating Efficiency

Valuation & price assessment

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Check trending companies

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