Synopsis:
NATCO Pharma approves in-principle evaluation of Agro business demerger to unlock pharmaceutical value, enhance growth, ensure operational focus, and engage advisors for optimal restructuring.
During Thursday’s trading session, shares of one of the leading globally vertically integrated pharmaceutical companies with a focus on R&D to manufacture niche and complex molecules surged nearly 5 percent on BSE, after the company’s Board approved the evaluation of agro business demerger.
At 01:42 p.m., the shares of NATCO Pharma Limited were trading at Rs. 848.6 on BSE, as against its previous closing price of Rs. 854.45, with a market cap of Rs. 15,199 crores. The stock has delivered negative returns of over 40 percent in one year, and has fallen by nearly 3 percent in the last one month.
What’s the News
As per the latest regulatory filings, NATCO Pharma Limited has granted in-principle approval to evaluate the demerger of the company’s Agro business into a separate legal entity.
The company’s management believes this restructuring will unlock value for its core pharmaceutical business, support long-term growth, and provide enhanced operational flexibility. It will allow dedicated management teams for each business vertical and enable distinct brand positioning for the respective entities.
Under the proposed demerger, NATCO Pharma may retain a minority stake in the new entity to facilitate shared services such as R&D, patents, and other common functions, supported through Transitional Service Agreements (TSAs) at arm’s length pricing.
The Board has authorised the management to conduct a detailed evaluation of the proposed restructuring, including determining an optimal capital and shareholding structure, and present recommendations to the Audit Committee and Board of Directors. The Board has also approved engaging consultants, legal and financial advisors, valuers, merchant bankers, and other necessary intermediaries to support the evaluation and execution of the potential transaction.
Financials
NATCO Pharma reported a marginal decline in revenue from operations, experiencing a year-on-year fall of nearly 2 percent, from Rs. 1,363 crores in Q1 FY25 to Rs. 1,329 crores in Q1 FY26. Similarly, the company’s net profit decreased during the same period from Rs. 668 crores to Rs. 480 crores, representing a decline of nearly 28 percent YoY.
NATCO Pharma Limited is engaged in the business of pharmaceuticals and agricultural chemicals, comprising research and development (R&D), manufacturing and selling of bulk drugs, finished dosage formulations.
The company creates, produces and sells finished dosage formulations (FDF), active pharmaceutical ingredients (API) and agrochemicals (technical and formulation). In the API segment, it has capabilities to develop and manufacture products with multi-step synthesis, semi-synthetic fusion technologies, high-potency APIs and peptides. It has manufacturing facilities in India, serving both domestic and international markets, including regulated markets like the United States of America and Europe.
Written by Shivani Singh
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