⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
NATCOPHARM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.3
| Stock Code | NATCOPHARM | Market Cap | 14,655 Cr. | Current Price | 818 ₹ | High / Low | 1,341 ₹ |
| Stock P/E | 9.65 | Book Value | 462 ₹ | Dividend Yield | 0.73 % | ROCE | 31.8 % |
| ROE | 27.5 % | Face Value | 2.00 ₹ | DMA 50 | 867 ₹ | DMA 200 | 907 ₹ |
| Chg in FII Hold | 1.07 % | Chg in DII Hold | -0.48 % | PAT Qtr | 501 Cr. | PAT Prev Qtr | 464 Cr. |
| RSI | 39.7 | MACD | -20.6 | Volume | 2,77,236 | Avg Vol 1Wk | 4,50,217 |
| Low price | 660 ₹ | High price | 1,341 ₹ | PEG Ratio | 0.06 | Debt to equity | 0.03 |
| 52w Index | 23.2 % | Qtr Profit Var | -24.2 % | EPS | 84.8 ₹ | Industry PE | 29.0 |
📊 Core Financials
- Revenue & Profitability: Quarterly PAT rose from 464 Cr. to 501 Cr., though YoY profit variation shows -24.2%, indicating volatility. EPS at 84.8 ₹ reflects strong earnings capacity.
- Margins: ROCE at 31.8% and ROE at 27.5% highlight excellent efficiency and profitability.
- Debt: Debt-to-equity ratio of 0.03 shows negligible leverage, strengthening financial stability.
- Cash Flow: Dividend yield of 0.73% is modest, suggesting reinvestment focus while still rewarding shareholders.
💹 Valuation Indicators
- P/E Ratio: 9.65 vs Industry PE of 29.0 → Undervalued compared to peers.
- P/B Ratio: Current Price (818 ₹) / Book Value (462 ₹) ≈ 1.77 → Reasonable valuation.
- PEG Ratio: 0.06 → Extremely attractive, suggesting strong growth potential relative to price.
- Intrinsic Value: Current price appears below fair value, offering upside potential.
🏭 Business Model & Competitive Advantage
- Natco Pharma specializes in niche pharmaceutical segments including oncology, hepatitis C, and complex generics.
- Strong R&D capabilities and focus on high-margin products provide competitive advantage.
- Low debt and high return metrics strengthen long-term sustainability.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation range between 750 ₹ – 800 ₹, closer to support levels and below DMA 200.
- Long-Term Holding: Strong fundamentals, undervaluation, and niche positioning make Natco Pharma suitable for long-term investors. Staggered buying recommended due to short-term profit volatility.
✅ Positive
- Low debt-to-equity ratio (0.03) ensures financial resilience.
- High ROCE (31.8%) and ROE (27.5%) highlight efficiency.
- P/E ratio significantly below industry average, indicating undervaluation.
- FII holding increased by 1.07%, showing foreign investor confidence.
⚠️ Limitation
- Quarterly profit variation of -24.2% highlights earnings volatility.
- Dividend yield of 0.73% is modest, limiting passive income appeal.
- Stock trading below DMA 200 suggests weak near-term momentum.
📉 Company Negative News
- DII holding decreased by 0.48%, showing reduced domestic institutional support.
- Profit volatility may impact investor sentiment in the short term.
📈 Company Positive News
- Quarterly PAT improved from 464 Cr. to 501 Cr.
- FII inflows (+1.07%) highlight growing foreign investor interest.
- Strong EPS of 84.8 ₹ reflects robust earnings capacity.
🌐 Industry
- Pharmaceutical sector benefits from global demand for generics and specialty drugs.
- Industry PE at 29.0 indicates peers trade at higher valuations, highlighting Natco Pharma’s undervaluation.
🔎 Conclusion
Natco Pharma demonstrates strong fundamentals with high return ratios, low debt, and undervaluation compared to industry peers. Despite short-term profit volatility, the company’s niche focus and R&D strength make it attractive for long-term investors. Entry around 750–800 ₹ offers a favorable risk-reward profile, with potential upside as earnings stabilize.
I can also highlight technical support and resistance levels using RSI, MACD, and DMA data to complement this fundamental analysis if you’d like.