Natco Pharma Ltd and Orchid Pharma Ltd are a couple of stocks that have plunged 15-20 per cent post their December quarter results, while stocks such as Ipca Laboratories Ltd (IPCA Labs) jumped on better-than-expected earnings. NBCC India, on the other hand, has seen its shares falling in five of last six sessions.
Analysts noted Natco Pharma’s missed Q3 consensus estimates on both revenue and Ebitda margin fronts. Revenue plunged 38 per cent YoY, due to lack of Revilimid sales in US and a drop in the domestic formulations business. Ebitda dived 86 per cent and margins 27 per cent due to increased R&D expense.
Nirmal Bang said it remain cautious on Natco Pharma, as growth is highly contingent upon the performance of Revlimid and CTPR. Excluding these two, it does not see any near-to-medium term visibility in either the US market or the Domestic market. The brokerage suggested 'Hold' on Natco Pharma with a revised target of Rs 1,044.
Orchid Pharma also missed Q3 revenue and profit estimates. Revenue for this drug maker fell 2 per cent YoY, due to pricing pressures. This coupled with higher costs dragged Ebitda margin to 12.1 per cent, down 150 basis points QoQ. While API pricing challenges are likely to persist in the near term, Nuvama expects Orchid Pharma to deliver 18 per cent core business growth against 20 per cent earlier, as volumes pick up and new clients come onboard.
"Factoring in this, we are cutting FY26E and FY27E EPS by ~15% each. That said, the long-term outlook is intact. NCE royalties and India pickup should lend support from FY26 while the 7ACA PLI project and Cefiderocol opportunity would propel revenues from FY27 and drive backward integration. ‘BUY’ with a target of Rs 1,570 (earlier Rs 1,710)," it said.
On Ipca Laboratories, MOFSL said the company delivered a better-than-expected performance in 3QFY25. It has consistently outperformed the industry in the domestic formulation (DF) market. However, this was partly offset by muted business in the South African market, it noted.
The API prices have been stable, and inventories are moving towards normalized quantum at the industry level.
"We raise our earnings estimates by 4 per cent/3 per cent/2 per cent for FY25/FY26/FY27 factoring in: 1) the increased share of higher-margin products, 2) better operating leverage for the US business of both IPCA and Unichem, and 3) a revival in the South African business. We value IPCA at 36 times 12M forward earnings to arrive at our targe of Rs 1,940 on a 12-month forward earnings basis," it said.
On NBCC (India) Ltd, Nuvama said PAT increased 4 per cent YoY, but was 14 per cent below its estimate. Order book improved QoQ to Rs 1 lakh crore. The management has guided for revenue of Rs 12,000–13,000 crore and Ebitda margin of 5.5–6 per cent for FY25E.
"Order-wins remained strong at Rs 47,200 crore in 9mFY25; the company awarded projects worth Rs 16,000 crore in the nine months of the year. While improvement in order intake is a positive, lesser-than-expected progress on top line/margins forces our hand to slash FY25-27 EPS by 3-5 per cent and PE from 50x to 45x. Maintain ‘BUY’ with a revised target of Rs 119 (earlier Rs 133)," it said.