Natco Pharma shares have plummeted 20% in just two trading days following the company's disappointing Q4FY26 earnings announcement, hitting a 10-week low of ₹937.10 on Monday before recovering slightly to ₹943.05. The stock was trading 7% lower at ₹943.05 as of 11:12 AM, significantly underperforming the BSE Sensex which rose 0.27%. The sharp decline represents a 24% correction from the stock's 52-week high of ₹1,226.10 touched on May 12, 2026, and demonstrates the market's severe negative reaction to the company's deteriorating financial performance. Average trading volumes jumped over six-fold with 2.21 million equity shares changing hands on both NSE and BSE, indicating heavy selling pressure as investors reacted to the weak quarterly results.
Natco Pharma reported a dramatic decline in fourth-quarter financial performance, with consolidated net profit falling 63.6% year-on-year to ₹180 crore when adjusted for one-time costs, compared with ₹406 crore in the year-ago quarter, as reported by Business Standard. The company's consolidated total revenue declined 36.5% year-on-year to ₹816.90 crore in Q4FY26, down from ₹1,827 crore in the same quarter last year. EBITDA dropped dramatically by 72.5% to ₹160 crore from ₹548 crore recorded in Q4 FY25, with the EBITDA margin contracting sharply to 21.3% from 45% in the year-ago quarter. The gross margin also contracted 52 basis points year-on-year to 79.1%, indicating severe operational challenges during the March quarter. However, the company's full-year consolidated net profit stood at ₹1,418.5 crore, lower than ₹1,883.4 crore recorded last year, while full-year consolidated total revenue was ₹4,375.9 crore compared with ₹4,784 crore in the previous financial year.
On the segmental front, revenue from the pharmaceuticals business stood at ₹716.5 crore, down 40.58% year-on-year, while revenue from the agro chemicals segment increased 50.66% YoY to ₹716.5 crore in Q4 FY26, according to The Economic Times. The formulations export business, including profit share and subsidiaries, remained the company's largest revenue contributor, generating ₹539.6 crore during the quarter and ₹3,234.5 crore for the full year, as reported by CNBC TV18. Domestic formulations revenue stood at ₹108.7 crore for the quarter, while API revenue came in at ₹63.9 crore. The Crop Health Sciences business contributed ₹22.6 crore during the quarter, while other operating and non-operating income stood at ₹82.1 crore. For the full year FY26, formulations exports generated ₹3,234.5 crore, domestic formulations contributed ₹440.9 crore, API segment reported ₹234.7 crore revenue, Crop Health Sciences revenue stood at ₹138.2 crore, and other operating and non-operating income came in at ₹327.5 crore.
Natco Pharma's management expects better FY28 performance with traction coming from Canada, Brazil and India besides some niche launches in the US which can translate into 15-25% PAT growth, according to Business Standard. The company has set its sights on future blockbusters from a US pipeline of 28 para-IVs with 20 FTFs which it expects to crystallize over the next 3-5 years beyond FY27. With a cash pile of ₹2,500 crore, the management has expressed willingness for ex-India merger & acquisitions (M&As). However, FY27 guidance remains muted with revenues of ₹3,400-3,500 crore (20-25% de-growth) and PAT of ₹700-750 crore (45-50% de-growth) due to the complete absence of gRevlimid and no major US launches, as noted by ICICI Securities. The management has reiterated that FY27 could be a year of consolidation, with growth pickup expected in FY28 backed by new launches including semaglutide in select markets, contribution from Adcock, and future exclusivity opportunities.
Analysts at ICICI Securities maintain a 'HOLD' rating on Natco Pharma with a revised target price of ₹1,000, based on 18x FY28E EPS of core business and an NPV of ₹100/share for exclusive products, according to Business Standard. The company's market capitalization stands at ₹18,072.19 crore as of May 29, 2026, with the stock trading in the pharmaceuticals sector and classified as a smallcap on BSE. The stock's 52-week high is ₹1,226.10 and 52-week low is ₹789.30, with the stock showing a P/E ratio of 11.61 and P/B ratio of 2.06 on May 29, 2026. Dividend yield stands at 0.59 per annum, while the stock has demonstrated mixed performance with gains of 17.89% over the last year compared to peers, though it has underperformed over longer periods relative to competitors like Sun Pharmaceutical Industries and Divi's Laboratories.
