Natco Pharma shares jump 4% amid weak broader markets; here' why

Shares of Natco Pharma surged during the trading session on Monday after the company announced a settlement on a US patent litigation. The company informed about the same through an exchange filing during the trading hours on Monday.

Natco Pharma announces that Mylan Pharmaceuticals Inc. and Novo Nordisk have reached a settlement of the US patent litigation related to generic Ozempic (Semaglutide), said the exchange filing. "Natco and Mylan are partnered on the development of generic Ozempic products. The terms of the settlement are confidential," it added.

Following the announcement, shares of Natco Pharma Ltd surged nearly 4.35 per cent to Rs 1,413.45 on Monday, commanding a total market capitalization close to Rs 25,000 crore. The scrip had settled at Rs 1354.65 in the previous trading session on Friday.

Shares of Natco Pharma have rallied 70 per cent in the year 2024 so far, while the stock has gained nearly 65 per cent in the last one year. The stock has gained 95 per cent from its 52-week low at Rs 725 hit in November 2023, while it has dropped nearly 14 per cent from its 52-week high at Rs 1,638.35 hit on September 12, 2024.

Nuvama Institutional Equities recently met with Mr Rajeev Nannapaneni, CEO of Natco Pharma. It has maintained a 'hold' rating on Natco Pharma with a revised target price of Rs 1,440.

"Citing takeaways Nuvama said that focus remains on niche launches even as inconsistent delivery is an issue. Olaparaib, Semaglutide are Erdafitinib are the next big launches; selective R&D approach yielded gRevlimid; Semaglutide—eyeing India, EMs launch in 2026 and beyond; Eyeing 8–10% in India and 15–20% in RoW," it added.

Natco Pharma's business comprises research and development, manufacturing and selling of bulk drugs and finished dosage formulations of FDFs and APIs. APIs business is strategic and serves captive requirements and third party sales. It caters to both domestic and international markets including regulated markets like the United States of America and Europe.

It has effectively established a local presence through its partners, ensuring sustained business growth. The management of the company plans to focus more on markets like Canada and Brazil, which offer robust growth opportunities, said SMC Global. It has a buy rating on the stock with a price target of Rs 1551.