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Natco Pharma Ltd. Stock Analysis

Mid Cap
Evaluated by 2734 users | BSE: 524816 | NSE: NATCOPHARM |
Pharmaceuticals & Drugs

Natco Pharma was promoted by V C Nannapaneni in the year 1981 as a private company to be in the business of research, developing, manufacturing and marketing of pharmaceutical substances and finished dosage forms for Indian and International markets. The...

Analysis of Financial Track Record

Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end
Financial track record gives insight into the company's performance on key parameters over the past ten years. MoneyWorks4me’s proprietary colour codes make it easy for retail investors to gauge the company’s past performance.
Natco Pharma Ltd. has performed well in majority of the past ten years indicating its past ten year financial track record is very good
Value Creation
 Mar'11Mar'12Mar'13Mar'14Mar'15Mar'16Mar'17Mar'18Mar'19Mar'20
Return on Capital Employed 12.91%11.46%12.43%13.65%16.54%14.7%31.1%26.79%18.03%11.39%
Growth Parameters
Growth Parameters Colour Code Guide
Net Sales (Rs. Cr.) 3484365586227161,0211,9582,0911,9861,790
Y-o-Y Gr. Rt.-25.1%28%11.6%15%42.7%91.7%6.8%-5%-9.9%
Adjusted EPS (Rs.) 3.823.725.216.169.4710.2329.3337.3335.0324.64
Y-o-Y Gr. Rt.--2.6%40.1%18.2%53.7%8%186.7%27.3%-6.2%-29.7%
Book Value per Share (Rs.) 24.6530.0234.2744.3252.976.2496.52168.09193.55211.31
Adjusted Net Profit 53.85881.8102157178511689640449
Net Op. Cash Flow (Rs. Cr.) 32.36870172125190330476699423
Debt to Cash Flow from Ops 6.813.84.791.382.480.580.670.360.550.74
Standalone financials take only the parent company into account while consolidated financials take into account financials of the parent company as well as of all its subsidiaries. In most companies consolidated financials should be used for analysis.
Natco Pharma Ltd. should be analysed on a Standalone basis
CAGR
CAGR Colour Code Guide
  9 yrs 5 yrs 3 yrs 1 yr
Net Sales 20%20.1%-2.9%-9.9%
Adjusted EPS 23%21.1%-5.6%-29.7%
Book Value per Share 2731.929.99.2
Share Price 41.3% 10.6% -1% 56.9%
Key Financial Parameter
Performance Ratio Colour Code Guide
 Mar'11Mar'12Mar'13Mar'14Mar'15Mar'16Mar'17Mar'18Mar'19Mar'20
Return on Equity (%) 16.614.2516.2816.0519.5216.0933.6828.5519.1412.07
Operating Profit Margin (%) 26.3525.6428.1329.9831.9427.9736.844.3941.1132.29
Net Profit Margin (%) 15.4513.3214.6616.3821.9917.4526.1132.9332.2325.06
Debt to Equity 0.630.550.620.320.350.080.130.060.110.08
Working Capital Days 228238238256261237169258328416
Cash Conversion Cycle 405260698576497797133
Corporate Governance What do we look at?
Corporate Governance
Board Credentials
Promoter's holding
Transparency
Integrity
Entity Percentage Holding
Promoters 48.91%
Institutions 33.03%
Non-Institutions 18.07%
Pledged *0.000.000.000.000.000.000.000.000.000.00
* Pledged shares as % of Promoter's holding (%)

MoneyWorks4Me analysed the past 10-year performance of Natco Pharma Ltd. and arrived at the following conclusion:

Past 10 year's financial track record indicates that Natco Pharma Ltd. is a good quality company. However, for specific investment actions please connect with your investment advisor.

The 5-year analysis of Natco Pharma Ltd.'s performance infers:

Natco Pharma Ltd. earnings have grown by 21.1%, whereas share price has appreciated 10.6% CAGR over the past five years, indicating the company's share price is likely undervalued. However, for specific investment actions please connect with your investment advisor.

We analysed the performance of Natco Pharma Ltd. share prices over the last 10 years. Here is what we found out:

Natco Pharma Ltd. share price has appreciated 30.3% annually over the past ten years.

Natco Pharma was promoted by V C Nannapaneni in the year 1981 as a private company to be in the business of research, developing, manufacturing and marketing of pharmaceutical substances and finished dosage forms for Indian and International markets. The company began its operations in 1984 in Andhra Pradesh. The company focus is primarily on niche therapeutic areas and complex products. It market and distribute products in various countries. It also operates

Natco Pharma was promoted by V C Nannapaneni in the year 1981 as a private company to be in the business of research, developing, manufacturing and marketing of pharmaceutical substances and finished dosage forms for Indian and International markets. The company began its operations in 1984 in Andhra Pradesh. The company focus is primarily on niche therapeutic areas and complex products. It market and distribute products in various countries. It also operates in certain key geographies through its subsidiaries.

Natco Pharma manufactures API products which are primarily used for captive consumption in its FDF products and are also sold to customers for various international markets. In the API segment, company has capabilities to develop and manufacture products with multi-step synthesis, semi synthetic fusion technologies, high-potency APIs and peptides.

Business area of the company

Natco Pharma is a vertically integrated and R&D focused pharmaceutical company engaged in developing, manufacturing and marketing of finished dosage formulations (FDF) and active pharmaceutical ingredients (APIs). It is also engaged in contract manufacturing business, whereby it undertake selected contracts with pharmaceutical companies to manufacture and supply pharmaceutical products. It has diversified into the business of crop health sciences to leverage is skills in organic chemistry.

Products:

  • Formulations
  • API’s
  • Contract manufacturing
  • Crop Health Sciences

Milestone:

  • 1981: Incorporated Natco Pharma Division at Kothur, Mahaboobnagar Dist, Telangana, India.
  • 1984: First full year in operation- sales of Rs 0.5 million
  • 1986: Inaugurated parental manufacturing facility at Nagarjunasagar, Telangana, India.
  • 1993: Inaugurated Natco’s chemical division at Mekaguda in Telangana.
  • 1995: Natco trust was founded. Natco merged three of groups companies with the parent company.
  • 1997: Inaugurated Natco Research Center (NRC) at Sanathnagar, Hyderabad, India.
  • 2003: Launched Oncology division with introduction of the flagship brand VEENAT (generic Imatinib Mesylate) for the treatment of chronic myelogenous leukemia.
  • 2006: Incorporated a finished dosage facility at Dehradun, Uttrakhand.
  • 2007: Natco launched its first ever ANDA in the US market. Natco acquired Savemart Pharmacy in USA.
  • 2008: Natco filed its first paragraph IV filing in the US market.
  • 2009: Inaugurated Natco Organics at Chennai, India with facilities dedicated for Cyto-toxic APIS’s Biotechnology products. Natco’s turnover reached $100 million.
  • 2011: Incorporated Natcofarma do Brazil LTDA.
  • 2012: Compulsory License was granted by government of India for patent protected anti-cancer drug Nexavar of Bayer.
  • 2012: Established Natco Pharma Asia Pte Ltd for sales and distribution in Singapore and winner of Golden peacock award for CSR work.
  • 2013: Established Natco Pharma Canada Inc for sales and distribution in Canada.
  • 2014: Established Natco Pharma Australia Pty Ltd for sales and distribution in Australia.
  • 2016: Sold U.S. based Save Mart pharmacy store. 
  • 2016: Winner of 'Golden Peacock Environment Management Award' for the Year 2016.
  • 2016: Launched generic version of Oseltamivir Phosphate capsules in the United States.
  • 2017: Started Cardiology and Diabetology divisions for domestic market with launches like Dabigatran. 
  • 2017: Launched Glatiramer Acetate injection (20 & 40 mg/ml) in the US. 
  • 2017: Launched complex drug delivery product, liposomal doxorubicin in the US.
  • 2018: USFDA completed inspection of Natco’s Mekaguda API facility with zero observations. 
  • 2018: Natco launched its first generic version of oral tablets Teriflunomide for Multiple Sclerosis in India. 
  • 2018: Natco introduced generic Posaconazole injection, available for the first time in India.
  • 2019: Commercial manufacturing operations begin in NATCO's Visakhapatnam Formulation Facility. 
  • 2019: Natco launches Crop Health Sciences Division.
  • 2019: Natco Pharma invests Rs 5 crore in OMRV Hospitals.
  • 2019: Natco Pharma has commenced commercial operations at Finished Dosage Formulations (FDF) facility in Visakhapatnam.
  • 2020: Natco Pharma’s subsidiary -- Natco Pharma (Canada) Inc., has entered into a settlement agreement with Celgene (now part of Bristol-Myers Squibb) for the product Lenalidomide Capsules in Canada. The terms of the agreement are confidential as per the agreement.
  • 2020: Natco Pharma has received Establishment Inspection Report (EIR) from the US Food and Drug Administration (USFDA) for its drug formulations manufacturing facility at Visakhapatnam (Vizag) Andhra Pradesh, India.
Puchho Befikar
SEBI Registered: Investment Adviser - INA000013323

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