NATCO Q2 revenue falls 30% as international formulations retreat

NATCO Pharma Limited reported Q2FY27 consolidated revenue of Rs 1,019.4 crore, down 30.3% year on year, as international formulations fell 41.4% to Rs 668.4 crore. NATCO’s domestic formulations, crop health sciences and active pharmaceutical ingredient businesses expanded from Q2FY26, but could not offset the reduction in its largest revenue stream.

Why did NATCO’s Q2FY27 revenue decline?

NATCO’s Q2FY27 consolidated revenue declined by Rs 443.6 crore from Rs 1,463 crore in Q2FY26 to Rs 1,019.4 crore. International formulations accounted for the principal movement, falling by Rs 471.8 crore to Rs 668.4 crore from Rs 1,140.2 crore a year earlier. The company defines this line item as including profit share and subsidiaries, making it broader than direct international product sales alone.

Pharmaceutical formulations revenue, which combines domestic and international formulations, declined 34.6% year on year to Rs 814.1 crore in Q2FY27 from Rs 1,245.6 crore. Other operating and non-operating income also decreased by Rs 28 crore, or 25.2%, to Rs 83.1 crore. These declines outweighed increases in domestic formulations, crop health sciences and active pharmaceutical ingredients, or APIs.

Which NATCO segments grew in Q2FY27?

NATCO’s domestic formulations revenue rose 38.2% year on year to Rs 145.7 crore in Q2FY27 from Rs 105.4 crore in Q2FY26. It also increased 6.8% from Rs 136.4 crore in Q1FY27. This was the largest reported year-on-year increase among the operating segments, adding Rs 40.3 crore versus the prior-year quarter.

Crop health sciences revenue increased 16.4% year on year to Rs 61 crore from Rs 52.4 crore, and rose 49.5% sequentially from Rs 40.8 crore in Q1FY27. API revenue grew 13.7% from Rs 53.9 crore in Q2FY26 to Rs 61.3 crore in Q2FY27, although it was 8.1% below Rs 66.7 crore in Q1FY27. Crop health sciences recorded the fastest sequential expansion, while domestic formulations delivered growth in both comparisons.

The three growing operating lines collectively added Rs 56.3 crore year on year: Rs 40.3 crore from domestic formulations, Rs 8.6 crore from crop health sciences and Rs 7.4 crore from APIs. International formulations alone declined by Rs 471.8 crore over the same period. This arithmetic shows why growth outside international formulations did not prevent the 30.3% fall in consolidated revenue.

What share of NATCO revenue came from export formulations?

NATCO’s Q2FY27 revenue mix assigned 66% to export formulations, compared with 14% for domestic formulations, 6% each for crop health sciences and APIs, and 8% for other income. The reported Rs 668.4 crore international-formulations figure equalled about two-thirds of total revenue of Rs 1,019.4 crore, consistent with the presentation’s rounded export-formulation share.

For H1FY27, NATCO reported a 63% export-formulation share, while domestic formulations represented 16%, APIs 7%, crop health sciences 6% and others 9%. Compared with Q2FY27, export formulations were therefore 3 percentage points lower in the half-year mix and domestic formulations were 2 percentage points higher. The presentation does not provide a comparable Q2FY26 percentage mix.

The revenue concentration explains the difference between the segment-level growth figures and the consolidated result. Domestic formulations brought in Rs 145.7 crore in Q2FY27, while crop health sciences and APIs each contributed about Rs 61 crore. International formulations, at Rs 668.4 crore, remained substantially larger than each of those lines despite its year-on-year decline.

How did NATCO’s Q2FY27 profit change?

NATCO reported earnings before interest, tax, depreciation and amortisation, or EBITDA, of Rs 310 crore in Q2FY27, down 54.4% from Rs 679.2 crore in Q2FY26. EBITDA margin fell to 30.4% from 46.4%, a 16-percentage-point change, while revenue declined 30.3%. The presentation states that EBITDA and its margin include other income.

Profit after tax before the share of profit of associate declined 66.5% to Rs 173.4 crore from Rs 517.9 crore. After including Rs 29.2 crore as the net-of-tax share of associate profit, profit after share of profit of associate was Rs 202.6 crore, down 60.9% from Rs 517.9 crore. The Q2FY26 table shows no associate-profit contribution, whereas Q2FY27 includes one.

Finance cost increased to Rs 17.6 crore from Rs 13.1 crore and current and deferred tax was Rs 69.8 crore against Rs 95.8 crore in Q2FY26. Depreciation declined from Rs 52.4 crore to Rs 49.2 crore. Reported basic and diluted earnings per share fell to Rs 11.31 from Rs 28.94, mirroring the lower profit after associate contribution.

What does NATCO’s sequential performance show?

NATCO’s revenue improved 28.3% sequentially from Rs 794.4 crore in Q1FY27 to Rs 1,019.4 crore in Q2FY27. International formulations rose 40.1% from Rs 477.1 crore, supplying Rs 191.3 crore of the Rs 225 crore revenue increase. Pharmaceutical formulations revenue as a whole rose 32.7% from Rs 613.5 crore to Rs 814.1 crore over the quarter.

Crop health sciences added Rs 20.2 crore sequentially, domestic formulations added Rs 9.3 crore, and other operating and non-operating income increased by Rs 9.7 crore. API revenue moved in the other direction, decreasing by Rs 5.4 crore from Rs 66.7 crore in Q1FY27 to Rs 61.3 crore. This quarter-on-quarter composition differs from the year-on-year comparison, where international formulations was the source of the major decline.

EBITDA rose 26.2% sequentially from Rs 245.7 crore in Q1FY27 to Rs 310 crore, but margin edged down from 30.9% to 30.4%. Profit after share of profit of associate was Rs 202.6 crore, compared with Rs 206.5 crore in Q1FY27. The Q1FY27 figure included Rs 84.3 crore from the associate, versus Rs 29.2 crore in Q2FY27, while profit after tax before that contribution increased from Rs 122.2 crore to Rs 173.4 crore.

Conclusion

NATCO’s Q2FY27 figures show two different comparisons. Revenue and profit were below Q2FY26 because the Rs 471.8 crore year-on-year reduction in international formulations outweighed growth in three other operating segments. Against Q1FY27, however, revenue rose by Rs 225 crore, led by a Rs 191.3 crore increase in international formulations and a Rs 20.2 crore rise in crop health sciences.

The next disclosed event is NATCO’s Q2FY27 earnings call, scheduled for 13 November 2026 at 4.00 PM Indian Standard Time. Investors will be able to watch for management’s discussion of the international-formulations movement, the Rs 29.2 crore associate-profit contribution and the 30.4% EBITDA margin, which was slightly below Q1FY27’s 30.9%.