Key highlights from Natco Pharma Ltd (NATCOPHARM) Q3 FY24 Earnings Concall
- Financial Performance
- Recorded total revenue of INR795.6 crores in Q3 FY’24, a 55% growth over INR513.3 crores in same period last year.
- Revenue crossed INR3,000 crores year-to-date with one more quarter to go, a major milestone for the company.
- Net profit grew over 3.5 times to INR212.7 crores in Q3 FY’24 from INR62.3 crores in same period last year.
- Profit crossed INR1,000 crores YTD with one more quarter to go, a major milestone for the company.
- Segment Performance
- Formulations exports including profit share and foreign subs delivered strong growth at INR605.6 crores.
- Domestic formulations also grew to INR99.4 crores.
- Crop health Sciences recorded revenue of INR14.1 crores.
- Guidance Update
- PAT guidance increased from INR1,000-1,200 crores to exceeding INR1,200 crores for FY24.
- Sales guidance almost INR4,000 crores for FY24.
- Subsidiaries performed well with INR163 crores revenue.
- Expect tax rate to remain around 16-17% in coming years.
- INR282 crores spent in 9M FY24, not expecting large capex going forward.
- Current investments for launches 5-7 years away.
- Facilities running optimally but pharma investments have long gestation periods
- Acquisition Update
- Looking for large acquisition in emerging markets instead of smaller ones.
- Strong balance sheet with net cash position of INR1,800 crores to support deals.
- No deal finalized yet but expectation to close something in next 12 months.
- Looking for 20%+ return on capital employed.
- US Business Performance
- Copaxone, lanthanum, lapatinib and other portfolio doing reasonably well.
- Strategy to focus on complex and first-to-file opportunities.
- Strong pipeline with semaglutide, olaparib filings done.
- Goal to file 2-3 more high-value products in next 12 months.
- Domestic Business growth
- Growth lagging at 8-10%, driven primarily by oncology which is 65% of portfolio.
- Evaluated acquisitions but found valuations too expensive.
- Have some interesting launches planned but not in near term.
- Need to acquire assets to expand coverage beyond niches.
- Revlimid Outlook
- Good performance in Q3 despite lower quota due to growth in other products.
- New allocation starts from March 2024, expects higher contribution in FY25.
- Spreading quota through year.
- First quota for March launched, expectation to do well.
- ROW Subsidiaries
- Canada, Brazil performing very well.
- Filing 7-8 products in each subsidiary.
- Starting operations in Colombia, Indonesia.
- Looking to acquire assets to grow ROW business further.
- Supply Chain Impact
- 50-60% increase in freight rates due to Red Sea crisis.
- Seeing some delays but managing supply of key products.
- Raw material prices from China stable for now.
- Higher logistics costs impacting expenses.
- Agrochem Outlook
- Revenue may end at INR150-160 crores this year, lower than expected.
- But good for a new entrant, has potential to scale to INR300-400 crores.
- Key is launching first generics and establishing brand with farmers.
- Exports to contribute later, focus on building India branded business.
- Strategic Investments
- Take minority stakes in startups for capability development.
- Invested in CAR-T company to get access to new technology not available internally.
- Singapore entity for potential manufacturing or portfolio advantage.
- Antidilution clause increased stake to 7% though initial investment small.