Buy Natco Pharma, target price Rs 954: ICICI Securities

ICICI Securities has given buy rating to Natco Pharma with a target price of Rs 954. The share price moved up by 17.69 per cent from its previous close of Rs 776.45. The stock’s last traded price is Rs 913.80.

Natco Pharma Ltd., incorporated in the year 1981, is a Mid Cap company (having a market cap of Rs 16894.09 Crore) operating in Pharmaceuticals sector.

For the quarter ended 30-06-2020, the company has reported a Consolidated sales of Rs 563.40 Crore, up 23.88 % from last quarter Sales of Rs 454.80 Crore and up 14.44 % from last year same quarter Sales of Rs 492.30 Crore. The Company reported net profit after tax of Rs 122.10 Crore in latest quarter.


Investment Rationale
The brokerage raises FY23 revenue/EPS estimates by 32.7/94.7% to factor in generic Revlimid sales. Considering certainty on Revlimid opportunity and 38.0% EPS CAGR over FY20-FY23E, The brokerage upgrades Natco to BUY from Add with a revised SoTP-based target price of Rs954/share (earlier: Rs875/share) including NPV of Rs302/share for Revlimid. Key downside risks: Delay in US launches and earlier-than-anticipated competition in Copaxone.

Promoter/FII Holdings
Promoters held 48.9 per cent stake in the company as of June 30, 2020, while FIIs held 24.4 per cent, DIIs 8.9 per cent and public & others 17.8 per cent.