Natco Pharma Ltd. faced a steep sell-off on Thursday, February 13, 2025, as the company’s shares fell nearly 20% following its December quarter earnings announcement. The company reported a 37.75% decline in consolidated net profit, triggering panic among investors. The stock, which had been losing for five consecutive sessions, opened at Rs 986 on the Bombay Stock Exchange (BSE), significantly below its previous close of Rs 1216.65. It hit an intra-day low of Rs 975, marking a 19.86% decline.
On the National Stock Exchange (NSE), the stock broke 19.99% to hit Rs 975.05.
Key Highlights:
What Caused the Sudden Drop?
The dramatic decline in Natco Pharma’s stock price follows its disappointing earnings report for the December quarter. According to the company’s regulatory filing, consolidated net profit dropped 37.75% to Rs 132.4 crore, compared to Rs 212.7 crore in the same quarter last year.
The decline in consolidated revenue from operations was equally concerning, falling to Rs 474.8 crore from Rs 758.6 crore in the corresponding period of the previous year. The key reason for the decline was a dip in the export of formulations, which has historically been a significant revenue driver for the company.
Stock Performance and Technical Indicators:
Natco Pharma’s stock has delivered positive returns of 15.86% over the past year and an impressive 86.01% over two years. However, the recent correction has wiped out a significant portion of its gains, with the stock losing more than 25% in just one week.
Technically, the stock is now trading below its 5-, 20-, 50-, 100-, and 200-day moving averages, signaling bearish sentiment.
Regulatory Approval: A Silver Lining
Despite the poor financial performance, Natco Pharma recently received approval from the U.S. Food and Drug Administration (FDA) for its generic version of Everolimus tablets for oral suspension. These tablets are used to treat individuals with tuberous sclerosis complex, a rare genetic condition.
The Abbreviated New Drug Application (ANDA) approval covers Everolimus tablets in strengths of 2 mg, 3 mg, and 5 mg. This development could offer future growth opportunities for the company in the U.S. market.
Natco Pharma’s sharp decline in profit and revenue has led to a significant drop in its share price, raising concerns among investors. However, the recent FDA approval for its generic Everolimus tablets offers a glimmer of hope for future growth. Investors will be closely watching how the company navigates these challenges and capitalizes on upcoming opportunities in the global pharmaceutical market.
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