Natco’s Q2 profit fell 60.88% YoY as margins stayed below FY26 levels
Revenue rebounded 31.57% QoQ, but lower other income and a higher tax rate kept net profit almost flat sequentially.
Filed 13 Nov 2026, 14:15 IST · Natco Pharma Ltd (NATCOPHARM)
Key takeaways
- Consolidated net profit fell 60.88% YoY as revenue declined 29.03% while expenses fell only 9.49%, cutting operating margin by 15.83 percentage points.
- Revenue rose 31.57% QoQ and operating margin improved 1.29 percentage points, but net profit slipped 1.89% as other income fell 43.34% and the tax rate rose 2.13 percentage points.
- Other income accounted for 29.85% of pre-tax profit, while the 26.66% operating margin was 4.96 percentage points above the 95-peer Healthcare median.
Price around the results
Sequential revenue rebound does not close the YoY gap
These are consolidated results. Revenue grew 31.57% QoQ and operating profit rose 38.28%, as expenses increased at a slower 29.29% pace. YoY, revenue fell 29.03% while expenses declined only 9.49%, so operating profit dropped 55.47%.
Margin recovered sequentially, but profit quality weakened
The sequential margin improvement of 1.29 percentage points reflects revenue growing faster than expenses. Other income fell 43.34% QoQ and still contributed 29.85% of pre-tax profit, while interest expense rose 35.38%. Pre-tax profit increased 0.93% QoQ, but the 2.13-percentage-point rise in the tax rate helped pull net profit down 1.89%; YoY, the tax rate was higher by 10.01 percentage points.
Operating margin is recovering from the FY26 trough
Operating margin rose from 17.26% in Q4FY26 to 25.37% in Q1FY27 and 26.66% in Q2FY27. It remains well below the 42.97% and 42.49% recorded in Q1FY26 and Q2FY26. Even so, Natco’s margin was 4.96 percentage points above the 21.70% median for the 95 Healthcare peers that had reported.
Management points to an oncology pipeline trial
Management said NRC-2694 is being tested in a US- and India-based Phase 2 trial for recurrent or metastatic head and neck cancer. The presentation said the US FDA had approved the trial for patients who progressed on Keytruda.
Natco’s post-results moves have usually been negative
The stock fell after six of its last eight results and rose after two, with a median absolute move of 3.64%. No current-session move is assessed here.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹967 cr | ₹735 cr | +31.57% | -29.03% |
| Other income | ₹81 cr | ₹144 cr | -43.34% | -18.70% |
| Expenses | ₹709 cr | ₹549 cr | +29.29% | -9.49% |
| Operating profit | ₹258 cr | ₹187 cr | +38.28% | -55.47% |
| Operating margin (%) | 26.66% | 25.37% | — | — |
| Interest | ₹18 cr | ₹13 cr | +35.38% | +34.35% |
| Depreciation | ₹49 cr | ₹47 cr | +4.46% | -6.11% |
| Profit before tax | ₹272 cr | ₹270 cr | +0.93% | -55.61% |
| Tax | ₹70 cr | ₹63 cr | +10.09% | -27.14% |
| Net profit | ₹203 cr | ₹207 cr | -1.89% | -60.88% |
| EPS (₹) | ₹11.31 | ₹11.53 | -1.91% | -60.92% |
Operating margin of 26.66% compares with a Healthcare sector median of 21.70% across 95 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
New initiatives
- NRC-2694 is being tested in a US- and India-based Phase 2 trial for recurrent or metastatic head and neck cancer.
What to watch
- Whether operating margin holds above 26.66% in the next quarter.
- Whether other income’s contribution to pre-tax profit moves below its current 29.85%.
- Whether the YoY revenue decline narrows from -29.03%.