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Investing.com - Natco Pharma Ltd (NTCPH:IN) was downgraded from Reduce to Sell by Axis Capital on Thursday, with its price target lowered to INR760 from INR810.
The downgrade follows Natco’s quarterly results, which missed consensus estimates significantly, with revenue, adjusted EBITDA, and profit after tax falling short by 13%, 36%, and 28% respectively.
Axis Capital cited three key concerns behind its rating change: no meaningful product launches in the near term to offset generic Revlimid price erosion, single-digit growth in the company’s domestic oncology business, and a still-underperforming agrochemical segment.
The research firm noted that gross margins declined approximately 430 basis points year-over-year to 82.5%, primarily due to price erosion in generic Revlimid. Following these results, Axis Capital cut its FY26/27/28E consolidated earnings per share estimates by 15%, 5%, and 9% respectively.
While the firm acknowledged that Natco’s acquisition of a 35.7% stake in Adcock would add approximately 7% to FY27E earnings per share, it warned that further earnings cuts might be necessary if semaglutide fails to gain traction in India.
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