NATCO Q2 revenue falls 30% and profit declines 61% year on year

NATCO Pharma Limited reported Q2FY27 consolidated revenue of Rs 1,019.4 crore and profit after share of associate of Rs 202.6 crore, down 30% and 61%, respectively, from Q2FY26 as lower Lenalidomide revenue outweighed growth in its base business, including subsidiaries. Revenue nevertheless rose from Rs 794.4 crore in Q1FY27.

Why did NATCO's Q2FY27 revenue decline year on year?

NATCO's consolidated revenue declined because lower Lenalidomide revenue in Q2FY27 was only partly offset by growth in its base business, including subsidiaries. Total revenue was Rs 1,019.4 crore for the quarter ended September 30, 2026, compared with Rs 1,463.0 crore in Q2FY26, a reduction of Rs 443.6 crore. Management identified Lenalidomide as the principal reason for the year-on-year decline, but did not disclose the product's revenue separately.

NATCO nevertheless recorded a sequential revenue increase of Rs 225.0 crore from Rs 794.4 crore in Q1FY27. The company attributed the quarter-on-quarter improvement to better performance in international formulations. Thus, Q2FY27 revenue was above the immediately preceding quarter, although it remained Rs 443.6 crore below the corresponding quarter a year earlier.

The financial summary separates earnings before interest, tax, depreciation and amortisation, or EBITDA, from the share of profit of associate. NATCO reported EBITDA before share of associate of Rs 310.0 crore in Q2FY27, compared with Rs 679.2 crore in Q2FY26 and Rs 245.7 crore in Q1FY27. The disclosed EBITDA measure includes other income.

Which NATCO businesses changed most during Q2FY27?

NATCO's international formulations business was its largest reported operating segment at Rs 668.4 crore in Q2FY27, but it fell Rs 471.8 crore from Rs 1,140.2 crore in Q2FY26. The segment includes profit share and subsidiaries, and its year-on-year reduction was the largest movement among the reported business lines. This segment-level movement is consistent with management's explanation that lower Lenalidomide revenue drove the consolidated decline.

International formulations improved by Rs 191.3 crore from Rs 477.1 crore in Q1FY27. That increase accounted for much of the Rs 225.0 crore sequential rise in total revenue, while other operating and non-operating income increased by Rs 9.6 crore to Rs 83.0 crore. Management specifically attributed the quarter-on-quarter improvement in consolidated revenue to international formulations.

Domestic pharmaceutical formulations rose in both comparisons, reaching Rs 145.7 crore in Q2FY27 from Rs 105.4 crore in Q2FY26 and Rs 136.4 crore in Q1FY27. Active pharmaceutical ingredients were Rs 61.3 crore, above Rs 53.9 crore a year earlier but below Rs 66.7 crore in the prior quarter. Crop Health Sciences rose to Rs 61.0 crore from Rs 52.4 crore year on year and Rs 40.8 crore sequentially.

How did NATCO's profitability change in Q2FY27?

NATCO's EBITDA before share of associate was Rs 310.0 crore in Q2FY27, down from Rs 679.2 crore in Q2FY26, while EBITDA margin decreased to 30.4% from 46.4%. Compared with Q1FY27, EBITDA increased by Rs 64.3 crore from Rs 245.7 crore, but the margin was 30.9% in the preceding quarter, 0.5 percentage point higher than Q2FY27.

Profit after tax before share of profit of associate was Rs 173.4 crore, compared with Rs 517.9 crore in Q2FY26 and Rs 122.2 crore in Q1FY27. After including Rs 29.2 crore as NATCO's share of associate profit, profit for the period was Rs 202.6 crore. That was Rs 3.9 crore below the Rs 206.5 crore reported in Q1FY27 and Rs 315.3 crore below the prior-year quarter.

Earnings per share were Rs 11.31 in Q2FY27, compared with Rs 28.94 in Q2FY26 and Rs 11.53 in Q1FY27. The quarter therefore produced a sequential increase in revenue and EBITDA, but profit after associate share and earnings per share were slightly below the preceding quarter. The source reports both the associate contribution and the corresponding earnings-per-share figures in its consolidated summary.

What was the contribution from NATCO's South African associate?

NATCO recorded Rs 29.2 crore as its share of profit from South African associate Adcock Ingram Holdings Limited in Q2FY27, after an adjustment relating to provisional PPA. Adcock Ingram reported quarterly revenue of Rs 1,343.8 crore and profit after tax of Rs 80.5 crore. NATCO said its share of profit was based on its 49% holding as of September 30, 2026.

The Rs 29.2 crore associate contribution was below the Rs 84.3 crore reported in Q1FY27. During Q2FY27, NATCO acquired an additional 13.25% stake in Adcock Ingram, taking its total holding to 49%. The source does not provide a Q2FY26 associate-profit contribution in the consolidated financial summary, where that line is shown as nil.

NATCO's board declared an interim dividend of Rs 1.25 per equity share of face value Rs 2 for Q2FY27. The financial-results notes also state that the board had declared an interim dividend of Rs 1.50 per equity share for Q1FY27. The Q2FY27 dividend decision was approved at the board meeting held on November 13, 2026.

Conclusion

The results show that the Rs 471.8 crore year-on-year reduction in international formulations was larger than gains in domestic formulations and Crop Health Sciences. Sequentially, international formulations increased Rs 191.3 crore, supporting the rise in total revenue, while the associate contribution fell to Rs 29.2 crore from Rs 84.3 crore in Q1FY27 and profit after associate share was Rs 3.9 crore lower quarter on quarter.

Investors can watch for management's discussion on the earnings call scheduled for November 13, 2026 at 4.00 PM Indian Standard Time. NATCO is also pursuing a revised regulatory filing for the proposed demerger of its agrochemical business undertaking into NATCO Crop Health Sciences Limited, after the board decided on September 9, 2026 to modify the scheme following the rights issue while maintaining the proposed share-swap ratio.