Natco Pharma Q2 FY27 Earnings Call: Raises FY27 PAT Guidance To Rs. 775-800 Cr, Flags 10-15% FY28 Growth (NATCOPHARM)

Sequential recovery, sharp YoY decline on lenalidomide

• Consolidated revenue of Rs.1,019.4 Cr — up from Rs.794 Cr in Q1 FY 2026-2027 but down from Rs.1,463 Cr YoY; the QoQ rise was driven by strong international formulations, while the YoY decline reflects lower lenalidomide revenue, partially offset by base business growth including subsidiaries.
• EBITDA (incl. other income) of Rs.310 Cr at a 30.4% margin — management said the Q1 and Q2 FY 2026-2027 operating margin is a sustainable base.
• Consolidated PAT of Rs.202.6 Cr — broadly flat versus Rs.206.5 Cr in Q1 FY 2026-2027.
• Associate Adcock Ingram reported Q2 FY 2026-2027 revenue of Rs.1,344 Cr and PAT of Rs.80.5 Cr — Natco's share of profit at its 49% holding (as of 30 Sep 2026) was Rs.29.2 Cr after a purchase price allocation adjustment.
• Natco raised its Adcock stake by 13.25% in July 2026 — taking total holding to 49%; Q2 NatCoC profit share was also dented by a one-off PPA amortization of ~Rs.6.5 Cr and a one-time VRS charge at one facility.
• Tax rates: ~27% India, ~29% consolidated in Q2 FY 2026-2027 — full-year FY 2026-2027 guidance of ~27-27.2% standalone and ~29-30% consolidated, the gap driven by subsidiary profitability mix.

FY27 PAT raised; FY28 growth of 10-15% flagged

• FY 2026-2027 PAT guidance raised to Rs.775-800 Cr — management described it as "a little less than 800 crores", better than the year's starting point; the earlier framework was Rs.34-35 bn revenue and Rs.700-750 Cr PAT, with ~Rs.400 Cr PAT already delivered in H1 FY 2026-2027.
• Q3 FY 2026-2027 expected to look good, Q4 FY 2026-2027 "a little weak" — management advised assessing full-year FY 2026-2027 performance rather than quarter-to-quarter results, given territory cycles and one-time orders/tenders.
• FY 2027-2028 business expected to grow ~10-15% — driven by the base business across ROW and the US; potential one-time items, exclusivities, or investment monetization are excluded as uncertain, with precise guidance to come closer to the end of the financial year.
• Agro business expected to lose ~Rs.20 Cr at EBITDA in FY 2026-2027 — included in PAT guidance since the demerger will not happen in FY 2026-2027; interest income on raised funds is also in the guidance.
• R&D guided at 8-10% of top line for FY 2026-2027 (~Rs.300-350 Cr) — below the >Rs.400 Cr spent in FY 2025-2026; Q3 FY 2026-2027 R&D expected a little higher than Q2.
• Management declined to give margin improvement outlook for years beyond FY 2027-2028, saying visibility will be clearer closer to the end of the financial year.

Carfilzomib, trabectedin lead; semaglutide US pending

• Carfilzomib 60 mg is a shared first-to-file with multiple filers — despite 180 days of exclusivity, its value "will not be that exciting"; the 30 mg and 10 mg strengths were approved later, so one lower strength carries sole FTF exclusivity which management expects to "do well", while the other has no exclusivity and launches after the first wave.
• Carfilzomib and trabectedin are the two major US launches over the next few quarters — trabectedin is a smaller product with Natco one of two first-to-file filers; all launches subject to launch and legal strategy.
• Olaparib expected in Brazil and Canada in the next few quarters — management also named Casfil and Travectidine among major FY 2027-2028 launches, with earnings driven by how these products perform.
• US semaglutide (Ozempic) Para IV: approval not yet received — Natco is answering FDA queries; management declined to give insight on approval timing or discuss exclusivity until the FDA provides clarity.
• Imbruvica Para IV settled — product approved after 30 months; management believes the exclusivity position is secure.
• Pomalidomide FTF (announced March 2026) disappointed — status was shared with ~5-6 generic competitors, price erosion was steep, and the 180-day exclusivity did not produce an earnings bump substantial enough to move earnings.
• Management called the US "a tough bet" — a good business with limited competition but a poor one with many competitors; ROW described as more stable.

Domestic compounding ~20%; Brazil up 66-80%

• Domestic formulations at Rs.145 Cr in Q2 FY 2026-2027 — vs ~Rs.100-110 Cr per quarter in FY 2025-2026; the rise reflects semaglutide (~Rs.6-7 Cr, including non-repeatable stocking one-offs), Resiplam, and a better base business, with ~20% domestic growth; the domestic base is Rs.130-135 on the present portfolio in FY 2026-2027.
• Internal target to compound domestic growth at another 15-20% in FY 2027-2028 — per IR lead Rajeev Menon.
• Brazil revenue of Rs.121 Cr in Q2 FY 2026-2027, up 66% — nearly Rs.300 Cr in H1 FY 2026-2027; the Brazil business grew almost 80% in FY 2026-2027 and is expected to continue performing well in FY 2027-2028.
• ROW drivers: Brazil, Middle East and Canada — MENA has performed well in FY 2026-2027; Canada has been stable with large launches coming in 2027, and management expects "27 will be a blowout year in Canada"; US exclusivities also expected to help.
• Semaglutide India: ~5-6% volume share, ~3% value share in Q2 FY 2026-2027 — monthly sales ~Rs.1.5-2 Cr (~Rs.50 lakh pen, ~Rs.1-1.5 Cr vial); the pen "has not done so great" while the vial has done better.
• Semaglutide India is not profitable today and management sees no near-term profits — pricing has been "pretty crappy" as competitors chase share; the hypothesis is to hold 5-6% volume share and benefit as market size grows over "the next 2, 3 years" (FY 2027-2028 onward), though management is not certain of the outcome.

Debt fully repaid post rights issue; net cash Rs.2,250 Cr

• Entire loan outstanding as of 30 September 2026 repaid once rights issue funds were raised — CFO Amit Parekh confirmed Natco currently has no loans; net cash is ~Rs.2,250 Cr as of the call, including rights issue inflows.
• Rights issue completed in October 2026 with ~10% overall dilution — proceeds primarily to reduce debt raised for an earlier acquisition, with part kept for working capital and a possible acquisition; no QIP is planned; the dividend is per the existing steady-dividend policy and not linked to the fund raise.
• ~Rs.300 Cr of capex spent in H1 FY 2026-2027 — against a typical Rs.350-400 Cr annual run rate (target ~Rs.400 Cr); spending covers Chennai and Mekaguda upgrades, API facilities and new API blocks, formulation upgrades and maintenance; a new oncology line at Nagarjuna Nagar has just started production, and a semaglutide cartridge line is under construction, expected ready in FY 2027-2028.
• Nearly Rs.3,500 Cr spent on acquisitions over the past four to five years — including AMCA, building a US front end and a South African presence (the largest share of spend); management is evaluating multiple transactions, is "quite seriously" pursuing one more (closing subject to regulatory approvals and definitive agreements), and declined to size it or give a valuation target.
• Adcock: only 49% was on offer — management would like to acquire the remainder if the major shareholder chooses to sell, but this is not currently in play; Adcock's new CEO (ex-Pfizer, innovative-pharma background) has driven an uptick in the prescription business, and a one-time layoff charge at one factory is already reflected in costs.
• eGenesis: just under $25 mn invested, a "substantial single digit"% stake — monetization routes include an India license (discussions ongoing) and a possible IPO; clarity on clinical data expected over the next 12 months; described as high risk, high return.

SEBI refiling pushes demerger to mid-CY27

• Crop Health Sciences marginally profitable in Q2 FY 2026-2027 — segment profit of ~Rs.10 lakh, positive versus Q1 FY 2026-2027.
• Crop Health grew ~15-17% from FY 2025-2026 to FY 2026-2027 — below higher internal aspirations; El Nino effects and credit-related provisions cited as headwinds; EVP Rajesh Chebiyam expects ~15-20% growth in FY 2026-2027 vs FY 2025-2026.
• Demerger filing to be resubmitted to SEBI, followed by an NCLT process — the rights issue changed the capital structure, pushing the timeline out by 4-6 months from the original plan.
• Management hopes to complete the demerger by mid-calendar year 2027 (FY 2027-2028) — not by fiscal year-end FY 2026-2027.
• International generics base of ~Rs.850-900 Cr — one-time sales take the number to about Rs.1,000 Cr for Q2 FY 2026-2027 (per analyst-cited figures of ~Rs.200 Cr increase and a 668 figure, as discussed on the call).
• South Africa acquisition (closed ~one year ago) still in regulatory gestation — multiple products filed; approvals take about two to three years, with value expected over the next one-and-a-half to two years.