Hyderabad-based Natco Pharma Ltd. announced on Friday that its consolidated net profit plummeted by 61% year-on-year to Rs 203 crore for the second quarter of fiscal year 2027 (Q2 FY27). This significant drop comes as the pharmaceutical company's total consolidated revenue also saw a 30% decline, reaching Rs 1,019 crore compared to Rs 1,463 crore in the corresponding period last year.
The company attributed the substantial year-on-year decline primarily to reduced revenue from its Lenalidomide product. Despite this, Natco Pharma noted growth in its base business, including subsidiary contributions, which partially offset the overall revenue decrease. On a sequential basis, however, revenue showed an increase from Rs 794.4 crore in Q1 FY27, bolstered by a stronger performance in its international formulations segment.
Financial Highlights and Segment Performance
For Q2 FY27, the consolidated profit after accounting for the share of profit from associates stood at Rs 202.6 crore, a stark contrast to Rs 517.9 crore reported a year ago. The earnings per share (EPS) for the quarter were Rs 11.31, down from Rs 28.94 in Q2 FY26. The company's consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) before the share of associate was Rs 310 crore, significantly lower than Rs 679.2 crore in the previous year's second quarter.
A closer look at segment-wise performance reveals:
- International Formulations: This segment, including profit share and subsidiaries, contributed Rs 668.4 crore to revenue, a decrease from Rs 1,140.2 crore in Q2 FY26.
- Domestic Pharmaceutical Formulations: Revenue in this segment grew to Rs 145.7 crore from Rs 105.4 crore.
- Active Pharmaceutical Ingredients (API): API revenue increased to Rs 61.3 crore from Rs 53.9 crore.
- Crop Health Sciences: This business reported revenue of Rs 61 crore, up from Rs 52.4 crore in the year-ago quarter.
Other operating and non-operating income for the quarter stood at Rs 83 crore, compared to Rs 111.1 crore last year.
Dividend Declaration and Share Performance
In conjunction with its Q2 results, Natco Pharma's board of directors declared a second interim dividend of Rs 1.25 per equity share with a face value of Rs 2 each for FY27. This represents a dividend payout of 62.5% of the face value. The company has set November 19, 2026, as the record date to determine eligible shareholders, with dividend payments commencing from November 27, 2026.
On Friday, prior to the results announcement, Natco's shares closed at Rs 807, marking a marginal decline of 0.22% from the previous close of Rs 808.80. The stock opened at Rs 809.10, touching an intraday high of Rs 819 and a low of Rs 779.65 during the trading session.
Strategic Investment in Adcock Ingram
During the quarter, Natco Pharma increased its stake in its South African associate company, Adcock Ingram Holdings Ltd., by acquiring an additional 13.25%. This acquisition raised Natco's total holding in Adcock Ingram to 49%. Adcock Ingram reported revenue of Rs 1,343.8 crore and a profit after tax of Rs 80.5 crore for the quarter. Natco's share of profit from the associate, based on its 49% holding as of September 30, stood at Rs 29.2 crore after provisional purchase price allocation adjustments.