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Looking for growth? Don't miss Natco Pharma with its track record of fast growth

02-06-2016 • About Natco Pharma ($NATCOPHARM) • By InTwits

Pay attention to Natco Pharma as a growth stock. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Natco Pharma showed growth in the last financial year. The company's revenue surged on 38.3% in FY2016. The growth also happened in EBITDA of 27.1% for the same period.

In the last 3 years the company showed fast revenue growth of 20.0% from FY2013 to FY2016 annually. EBITDA surged on 21.6% from FY2013 to FY2016 annually.

Natco Pharma ($NATCOPHARM) financials for the last 5 years

mln. INR FY2012 FY2013 FY2014 FY2015 FY2016
Revenue5,2376,6057,3898,25311,416
Revenue growth, %26.1%11.9%11.7%38.3%
SG&A, %
EBITDA1,1261,5311,8372,1652,752
EBITDA growth, %35.9%20.0%17.9%27.1%
EBITDA margin, %21.5%23.2%24.9%26.2%24.1%
Net Income5967191,0271,3461,552
Net Income margin, % 11.4%10.9%13.9%16.3%13.6%
 
CAPEX1,2801,0781,0601,1671,574
CAPEX/Revenue, %24.4%16.3%14.4%14.1%13.8%
Debt2,5863,3772,4043,1181,125
Cash346100102124441
Net Debt/EBITDA2.0x2.1x1.3x1.4x0.2x
 
ROIC, %14.4%15.5%15.7%15.4%17.2%
ROE, %14.4%14.3%16.3%17.1%14.5%

Profitability and return on investment


EBITDA growth was partly attributed to margin expansion. In the last 3 years Natco Pharma showed small growth in EBITDA margin of 0.900 pp from 23.2% in FY2013 to 24.1% in FY2016.

Natco Pharma shows attractive ROIC at 17.2% for the last 12 months which assumes stable development model. Three years ago it was a bit lower at 15.5%. For the last three years the average ROIC was 16.1%.

Net Income margin dropped on 2.70 pp from 16.3% to 13.6% in FY2016. If we look for the longer period Net Income margin surged on 2.70 pp from 10.9% in FY2013 to 13.6% in FY2016.

Natco Pharma operates at ROE of 14.5%. For the last three years the average ROE was 16.0%.

Capital expenditures (CAPEX)


To this fast growth the company had to invest in CAPEX.In FY2016 the company had CAPEX/Revenue of 13.8%. CAPEX/Revenue dropped on 2.54 pp from 16.3% in FY2013 to 13.8% in FY2016. Average CAPEX/Revenue for the last three years was 14.1%.

Leverage (Debt)


Having such a fast growth profile Natco Pharma keeps low debt level at 0.2x Net Debt/EBITDA. In the longer period Natco Pharma showed big decline in leverage of 1.89x from 2.14x in FY2013 to 0.25x in FY2016.

Management team


Natco Pharma is run by Rajeev Nannapaneni as a CEO.

Peers in Pharmaceuticals


Below we provide Natco Pharma benchmarking against other companies in Pharmaceuticals industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Mangalam Drugs & Organics ($MANGALAM)-18.2%-2.1%79.8%33.7%
Sun Pharmaceutical Industries ($SUNPHARMA)39.9%40.4%42.4%70.2%
Lyka Labs ($LYKALABS)41.9%-25.7%-22.6%68.7%
Marksans Pharma ($MARKSANS)16.7%23.3%43.3%26.8%
Torrent Cables ($TORRCABS)27.5%17.4%-42.9%26.5%
 
Median (41 companies)25.1%14.7%13.7%8.6%12.2%
Natco Pharma ($NATCOPHARM)26.1%11.9%11.7%38.3%


Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top
Dr.Reddy'S Laboratories ($DRREDDY)52.1%57.4%57.6%59.6%
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%0.0%0.0%
 
Median (2 companies)46.9%26.1%28.7%28.8%29.8%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Divi'S Laboratories ($DIVISLAB)37.2%38.2%40.2%37.4%
Hester Biosciences ($HESTERBIO)32.9%
Sun Pharmaceutical Industries ($SUNPHARMA)40.8%44.3%44.9%29.2%
Dr.Reddy'S Laboratories ($DRREDDY)25.8%22.9%25.1%23.2%25.8%
Marksans Pharma ($MARKSANS)-27.2%15.0%18.1%23.2%
 
Median (53 companies)12.7%12.8%14.3%12.0%18.7%
Natco Pharma ($NATCOPHARM)21.5%23.2%24.9%26.2%24.1%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Claris Lifesciences ($CLARIS)58.1%42.9%103.1%15.8%
Wintac ($WINTAC)22.8%
Hester Biosciences ($HESTERBIO)21.5%
Ipca Laboratories ($IPCALAB)11.2%8.3%11.6%17.8%
Granules India ($GRANULES)8.8%15.2%24.3%11.4%9.4%
 
Median (31 companies)7.7%7.5%5.7%6.0%8.0%
Natco Pharma ($NATCOPHARM)24.4%16.3%14.4%14.1%13.8%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Marksans Pharma ($MARKSANS)-142.4%34.9%33.8%41.2%
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%35.7%62.1%
Jenburkt Pharmaceuticals ($JENBURPH)34.1%29.0%32.4%35.3%
Abbott India ($ABBOTINDIA)29.6%26.9%30.5%34.2%34.1%
Divi'S Laboratories ($DIVISLAB)30.6%30.4%32.3%30.5%
 
Median (63 companies)13.7%13.2%14.4%13.0%13.1%
Natco Pharma ($NATCOPHARM)14.4%15.5%15.7%15.4%17.2%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Jubilant Life Sciences Limited ($JUBILANT)4.0x3.5x3.5x6.4x3.2x
Shasun Pharmaceuticals ($SHASUNPHAR)2.8x4.5x6.0x6.2x
Claris Lifesciences ($CLARIS)1.9x1.1x1.8x3.2x2.9x
Dishman Pharmaceuticals & Chemicals ($DISHMAN)3.6x2.6x2.3x2.9x2.1x
Neuland Laboratories ($NEULANDLAB)4.2x3.5x2.6x2.6x2.0x
 
Median (48 companies)1.4x1.2x0.3x0.0x0.7x
Natco Pharma ($NATCOPHARM)2.0x2.1x1.3x1.4x0.2x


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