– By Dilip Davda
- The company is engaged in dealing in generic drugs with a focus on the US markets.
- The company posted declining trends for its top and bottom lines from FY26 onwards.
- Based on its recent average financial data, the issue appears aggressively priced.
- Ongoing geopolitical tension and hawkish stance of US President for pharma industry, this company may face slide in its working, which is evident from the recent performances.
- The RI is at just around 5% discount, making it a bit risky bet.
- Only well-informed investors may park moderate funds for long term.
ABOUT COMPANY:
Natco Pharma Ltd. (NPL), primarily deals in generic drugs. In the US market, it seeks to launch generic pharmaceutical products either where patent protection or other regulatory exclusivity of equivalent branded products have expired, where patents have been declared invalid or where products do not infringe on the patents of others.
However, at times, the company may seek approval to market generic products before the expiration of patents relating to the branded versions of those products, based upon its belief that such patents are invalid or otherwise unenforceable, or would not be infringed by its products. NPL’s research and development strategy places emphasis on first-to-market and fast-to-market opportunities and the development of complex pharmaceutical products. Accordingly, the commercial returns from certain products may depend significantly upon the timing of their launch and the competitive landscape at the time of launch. An adverse patent determination or delay resulting from intellectual property litigation may therefore result in it losing a significant part or all of the commercial opportunity associated with a product.
NPL operates in a highly regulated industry, and its operations are subject to extensive regulation in each market in which it does business. All aspects of its business, including research and development, manufacturing, and sales and marketing activities, are subject to extensive legislation and regulation by various local, regional, national and overseas regulatory regimes. NPL’s business is also subject to the receipt of all required licenses, permits and authorizations, including local land use permits, manufacturing permits, building and zoning permits, and environmental, health and safety permits.
The company is also subject to laws and regulations governing employee relationships, including minimum wage, maximum working hours, overtime, working conditions, hiring and termination, contract labour and work permits. If it fails to comply with applicable laws and regulations, it may be subject to penalties, including revocation or suspension of licenses and approvals, and criminal sanctions. Failure to obtain required licenses and approvals or to comply with applicable laws could also lead to imposition of sanctions by the relevant authorities, including penalties.
As of March 31, 2026, it filed 299 patent applications in India, of which 116 have been granted, and 329 patent applications in other jurisdictions, of which 217 have been granted. The company has 45+ approved abbreviated new drug applications with the U.S. Food and Drug Administration and 25+ products in pipeline. It has also made 28 Paragraph IV applications, of which 17 have received tentative or final approval. The offer document is silent on its employees’ strength.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 17058082 equity shares of Rs. 2 each at a fixed price of Rs. 750.00 per share to mobilize Rs. 1279.40 cr. The RI opening for subscription on October 12, 2026 and will close on October 22, 2026. The company is offering RI in the ratio of 2 for 21to its eligible stakeholders as of the record date of October 01, 2026. The company is asking for full money on application for number of shares applied. Post allotment, RI shares will be listed on BSE and NSE. The company is spending Rs. 20.40 cr. for this RI process, from the net proceeds, Rs. 810.50 cr. for repayment/prepayment of certain borrowings, Rs. 110.00 cr. for expenses on R & D and related work, Rs.338.50 cr. for inorganic growth through unidentified acquisitions and general corporate purposes.
The RI is solely lead managed by the company itself, and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Nuvama Wealth Management Ltd., and ICICI Securities Ltd., are the Advisors to the RI.
Post-RI, company’s current paid-up equity capital of Rs. 35.82 cr. (179109870 equity shares) will stand enhanced to Rs. 39.23 cr. (196167952 shares). Based on the RI pricing, the company is looking for a market cap of Rs. 14712.60 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted total revenue / net profit of Rs. 4784.00 cr. / Rs. 1883.40.cr. (FY25), Rs. 4375.90 cr. / Rs. 1418.50 cr. (FY26). For Q1 of FY27 ended on June 30, 2026, it earned a net profit of Rs. 206.50 cr. on a total income of Rs. 794.40 cr. The company marked de-growth in its top and bottom lines FY26 onwards. Its NAV stood at Rs. 532.55 as of June 30, 2026.
DIVIDEND POLICY:
As per BSE Website, the company has paid a dividend of Rs. 2 per share in August 2025, Rs. 1.50 per share in November 2025, Rs. 1.50 per share in February 2026, and Rs. 1.50 per share in August 2026. Thus, it is a dividend paying company. However, the offer document is silent on its dividend policy.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 524816 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 826.80 on September 30, 2026, and opened on an ex-right basis at Rs. 801.00 on October 01, 2026. Since then, it has marked a high/low of Rs. 827.65 / Rs. 788.00. The scrip last closed at Rs. 790.00 as of October 09, 2026. For the last 52 weeks’ it has posted a high/low of Rs. 1216.29/ Rs. 785.76.
The promoters’ holding has been at 49.42% for the last two quarters ended on June 30, 2026. The counter is trading marginally above the RI price, indicating movement of vested interest operations.
CONCLUSION:
NPL is engaged in dealing in generic drugs with a major focus on the US markets. The company posted declining trends for its top and bottom lines from FY26 onwards. Based on its recent average financial data, the issue appears aggressively priced. Ongoing geopolitical tension and hawkish stance of US President for pharma industry, this company may face slide in its working, which is evident from the recent performances. The RI is at just around 5% discount, making it a bit risky bet. Only well-informed investors may park moderate funds for long term.
Review By Dilip Davda on August, 2026
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detailed fundamental and financial analysis of companies coming up with IPOs helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
