Natco Pharma's Q2 Profit Plummets 23.5%! Stock Tumbles as Margins Shrink - Investor Alert!

Author

Abhay Singh | Whalesbook News Team

Detailed Coverage:

Natco Pharma announced its financial results for the September quarter (Q2) of the fiscal year 2025-26, revealing a significant 23.5% year-on-year decline in net profit. The net profit stood at ₹518 crore, a considerable drop from ₹677.3 crore recorded in the same period last year. The company's revenue also experienced a marginal dip, falling to ₹1,363 crore from ₹1,371 crore year-on-year.

Operational performance metrics showed a sharper deterioration. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw a substantial decrease of 28%, amounting to ₹579 crore compared to ₹804 crore in the prior year. Consequently, the EBITDA margin narrowed significantly to 42.5% from 58.6% year-on-year, indicating reduced profitability from core operations.

Despite the weaker financial performance, the board of directors declared an interim dividend of ₹1.50 per equity share for the financial year 2025-26. The record date for this dividend has been set for November 20, 2025, with payments commencing from November 28, 2025.

Following the earnings announcement, shares of Natco Pharma Ltd. traded 2% lower, settling at ₹810. The stock has faced significant headwinds throughout 2025, with a cumulative decline of over 40% year-to-date.

Impact: This earnings report is likely to exert negative pressure on Natco Pharma's stock price. The substantial fall in net profit and EBITDA, coupled with a shrinking margin, signals potential operational challenges or a slowdown in key business segments. While the interim dividend offers some support, the overall financial performance deterioration is a key concern for investors. The stock's already steep year-to-date decline suggests that market sentiment has been cautious, and these results may reinforce that caution. Rating: 7/10

Difficult Terms: - Net Profit: The profit a company makes after deducting all expenses, taxes, and interest from its total revenue. - Revenue: The total income generated from the sale of goods or services related to the company's primary operations. - EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance that excludes the impact of financing and accounting decisions. It reflects the profitability of a company's core business operations. - EBITDA Margin: Calculated by dividing EBITDA by Revenue and expressed as a percentage. It indicates how efficiently a company is converting revenue into operating profit. - Interim Dividend: A dividend payment made by a company to its shareholders during its financial year, before the final annual dividend is declared.