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Natco: Weak Q2 result, a miss on all fronts

News: Natco’s Q2FY22 revenues de-grew 53% YoY to | 377 crore due to sharp decline in export formulations (down 60% YoY to | 190 crore) & APIs which declined 62% YoY to | 76 crore. Domestic formulations also posted a de-growth of 5% YoY to | 103 crore due to likely reduction in sales of covid portfolio. EBITDA margins contracted 1576 bps YoY to 19% and EBITDA declined 74% YoY to | 70 crore. Consequently net profit for the quarter declined 68% YoY to | 65 crore. Delta vis-à-vis EBITDA was due to higher other income and lower tax being partially offset by higher depreciation and interest expense. [Note: Base of Q2FY21 also includes a one-off settlement contribution].

Views: Q2FY22 results were a significant lower than I-direct estimates on all fronts due to weak export and API business and less traction for domestic sales this quarter. However, the company expects growth in H2FY22 due to few high value launches in the US, continued growth in domestic formulations with new products and contribution from Crop Health division.