Please refer to important disclosures at the end of this report
1
Natco Pharma Limited (NPL) is a pharmaceutical company engaged in
developing, manufacturing and marketing finished dosage formulations (FDF)
and active pharmaceutical ingredients (APIs). NPL has built a strong product
pipeline for the US market with 38 ANDA filings of which 16 are PARA IVs having
branded market size of USD 14 billion. The company’s strategy is to develop and
manufacture the products in house and to partner with large pharma companies
to market the same in US. NPL has been the first to launch some of first time
generic oncology drugs in India such as generic Nexavar, generic Gleevec, etc.
thereby establishing itself as a leading player in the Indian oncology space. Fo
r
NPL the positive factors are that its US pipeline largely consists of products that
have high entry barriers because of complex manufacturing, difficult formulation
and regulatory challenges. NPL has delivered robust financial growth in past 5
years on back of its leading position in domestic oncology space and large base
of innovative products. On the back of robust financial growth and health
y
operating cash flows, NPL has maintained strong balance sheet with negligible
debt in its balance sheet. Better cost efficiency led gradual improvement in net
profit margin which helped the company to sustain a RoE in the range between
15-20% in past 5 years. Management is upbeat on its US business and expected
to touch USD 100 million business by FY19E, which would further enhance
margins and return ratios of the company. The key product approvals, coupled
with timely monetisation of key opportunities could result in earnings upgrade fo
r
the company. The company has good consistent profit growth of 22% CAGR ove
r
the last 5 years. Hence Buy.
BUY
CMP `653
Stock Info
Sector
Beta 0.8
Bloomberg Code
Shareholding Pattern (%)
Promoters 51.3
MF / Banks / Indian Fls 9.2
FII / NRIs / OCBs 20.0
Indian Public / Others 19.5
Abs. (%) 3m 1yr 3yr
Sensex (6.6) 2.7 28.9
Natco Pharma 2.5 32.0 310.1
52 Week High / Low 704/390
Avg. Daily Volume 51,521
Pharmaceuticals
Market Cap (
`
cr) 11,384
2
BSE Sensex 26,305
Nifty 8,108
Face Value (
`
)
Reuters Code NATP.BO
NTCPH@IN
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808
Natco Pharma
Others | Pharmaceuticals
November 16, 2016
Natco Pharma | Pharmaceuticals
November 16, 2016
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Natco Pharma
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)