Natco Pharma shares closed nearly 5% lower on Friday, ending at ₹907 on the NSE, down ₹44.70 from the previous close of ₹951.70. The stock experienced significant selling pressure throughout the session, falling from around ₹948 at 2:10 PM to ₹891 by 2:20 PM, with the selling intensifying in the afternoon session. Despite some recovery attempts, the stock remained firmly in the red at the close. The sharp market reaction reflects investor concerns over the company's deteriorating financial performance across all key metrics, with the stock touching an intraday high of ₹964.85 before sliding to a low of ₹886.35 during the trading session.
The pharmaceutical company reported significant declines across all major financial parameters in Q1FY27. Net profit fell 57.04% year-on-year to ₹206.50 crore compared to ₹480.70 crore in the same quarter last year. Revenue from operations declined 44.68% year-on-year to ₹735.20 crore from ₹1,328.90 crore in Q1FY26. EBITDA dropped 67.4% to ₹185.60 crore from ₹571.90 crore in the prior fiscal year. Most concerning was the sharp contraction in margins to 25.37% from 42.97% in the year-ago period, indicating significant operational challenges. The decline was largely attributable to lower lenalidomide revenue during the quarter, which was partially offset by growth in the base business. Total expenses for the quarter were lower at ₹608.8 crore, compared with ₹818.7 crore a year earlier, providing some cost relief during the challenging period.
The company's diversified portfolio showed mixed results across different segments. Domestic pharmaceutical formulations revenue stood at ₹136.4 crore, up from ₹107 crore in the year-ago period, indicating strong performance in the home market with 28% year-on-year growth. However, international formulations revenue fell sharply to ₹477.1 crore, against ₹1,120.9 crore in the corresponding quarter last year, representing a significant decline of over 57% year-on-year. The Active Pharmaceutical Ingredients (API) segment posted revenue of ₹66.7 crore, up from ₹52.6 crore in the same period last year. The company's performance was largely driven by lower lenalidomide sales in the current quarter, which significantly impacted overall revenue growth despite positive contributions from other business segments.
A critical component of Natco Pharma's profitability this quarter came from its associate, Adcock Ingram Holdings Limited in South Africa. Adcock Ingram reported revenue of ₹1,582.8 crore and a profit after tax of ₹242.2 crore for the quarter. Natco Pharma's share of this profit, based on its 35.75% holding as of June 30, 2026, stood at ₹84.3 crore. In July 2026, Natco Pharma acquired an additional 13.25% stake in Adcock Ingram, increasing its total holding to 49%. This acquisition, completed through its wholly-owned subsidiary Natco Pharma South Africa Proprietary Limited, involved a purchase consideration of ZAR 1,814.74 million (approximately ₹10,600 million). With international formulation revenue plummeting by over 57% year-on-year, the ₹84.3 crore share of profit from Adcock Ingram represented approximately 41% of the total consolidated net profit of ₹206.50 crore, underscoring the strategic importance of the South African associate in stabilizing earnings during a period of weakness in the primary US-focused oncology pipeline.
Despite the weak quarterly performance, Natco Pharma's board of directors approved a fund raise of up to ₹2,000 crore through the issuance of shares and securities via qualified institutional placement (QIP) and/or other permitted instruments. As reported by CNBC TV18, Kotak Neo, and The Economic Times, this substantial capital raising initiative suggests the company's management may be positioning for future growth opportunities or strategic investments. The fundraising approval comes at a time when the company faces significant financial headwinds from its declining operational metrics, with the initiative aimed at strengthening the company's financial flexibility as it continues to invest in its business and growth opportunities. The proposed fund-raising could be through a public issue, preferential issue, rights issue, private placement, qualified institutions placement, or any combination of these or any other permitted method, subject to necessary regulatory and shareholder approvals.
The company's board also approved an interim dividend of ₹1.50 per share for FY27, providing some return to shareholders despite the challenging quarter. The record date for determining shareholders eligible for the interim dividend has been fixed as August 20, 2026, with payment of the interim dividend commencing from August 26, 2026. The board also approved the notice for the 43rd Annual General Meeting and authorized the Chairman and Managing Director to fix the date and time for the event via video conference or other audio-visual means. Headquartered in Hyderabad, Natco Pharma is a multinational pharmaceutical company specialising in complex generics, active pharmaceutical ingredients and oncology medicines, founded in 1981. The company operates across more than 50 countries and also runs a Crop Health Sciences business, positioning itself as a diversified healthcare solutions provider despite current operational challenges.
