Nature of Disclosure: Transcript of Q4 FY26 earnings conference call held on May 29, 2026, submitted under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Financial Performance Highlights:

  • Full Year FY26 (Consolidated): Total revenue of INR4,375.9 crores (vs. INR4,784 crores last year); Net profit of INR1,418.5 crores (vs. INR1,883.4 crores last year)
  • Q4 FY26 (Consolidated): Net revenue of INR816.9 crores (vs. INR1,287.3 crores in Q4 last year); Profit of INR269 crores (vs. INR406 crores same period last year)
  • Net profit includes a one-time benefit of INR115 crores due to transition to the new tax regime from FY26-27, involving remeasurement of deferred tax assets on MAT credit and other deferred tax assets/liabilities
  • Revenue from associate company Adcock Ingram Holdings Limited, South Africa: INR1,208.2 crores; PAT: INR102.5 crores; Natco's share of profit: INR35.7 crores based on current holding

Operational and Business Updates:

  • Revenue Decline: Attributed primarily to loss of Revlimid (lenalidomide) exclusivity and increased competition
  • West Asia War Impact: Some supply challenges with increased freight expenses due to rerouting, but managed to supply products
  • Other Expenses: Higher R&D expenses and engineering expense write-downs totaling INR20-30 crores in Q4
  • Tax Rate: Expected to be approximately 25% (including surcharge) under new tax regime for FY27-FY28
  • Cash Position: Net cash of approximately INR2,400 crores at group level

Management Guidance for FY27:

  • Revenue expectation: INR3,400-3,500 crores
  • PAT expectation: INR700-750 crores (includes associate profit)
  • Adcock Ingram expected revenue: $580-600 million; PAT expectation: $47-48 million

Product Pipeline and Growth Drivers:

  • Semaglutide Launch: First generic for vial in India launched day 1; pen launched a month later; current run rate ~INR2 crores/month for Natco brand; total including partners ~INR4-5 crores/month; expected annualized revenue INR75-100 crores
  • Brazil Subsidiary: Strong performance with first-time oncology launches; FY26 turnover ~INR257 crores plus ~INR30 crores direct billing from India; expected to reach $55-60 million in FY27
  • Canada Subsidiary: FY26 turnover INR229 crores; expected 10-15% growth
  • Future Exclusivities: Expected to trigger in FY27-28 in US, Brazil, and Canada markets

R&D and Innovation:

  • FY26 filings: 7-8 filings in US; targeting 8-9 filings in FY27 including complex and first-to-file products
  • R&D expenditure expected at 7-9% of revenue for FY27
  • NRC-2694: Early stage development, no commercialization timeline
  • eGenesis Investment: $8 million investment in genetically modified pig kidney technology; patients showed positive results for ~6 months; more transplants expected in next 12-18 months

Crop Health Sciences Division:

  • FY26 revenue: ~INR140 crores (vs. INR60 crores last year)
  • Demerger process underway for focused approach
  • Impacted by 25-30% increase in input raw material costs due to West Asia war
  • Predominantly domestic business with minimal exports

Manufacturing Facilities:

  • 4 US FDA facilities: 2 API plants and 2 finished dosage factories
  • 3 facilities (Kothur, Chennai, Mekaguda) inspected and cleared in 2025 with EIRs received
  • Vizag facility pending inspection, expected sometime in FY27

Strategic Initiatives:

  • Acquisition Strategy: Actively pursuing 1-2 large acquisitions using INR2,400 crores net cash; focusing on international markets (not India) for better valuations; aiming to close transactions in FY27
  • Geographic Diversification: Building presence in US, Brazil, Canada, India, South Africa to create more stable earnings profile
  • Long-term Vision: Transform from jackpot-based earnings to more stable business with 70% base revenue contribution and 25-30% from first-to-file/special products
  • Expected Growth: Compounding growth of 15-25% annually starting from FY28 onwards from base of INR700-750 crores PAT in FY27

Capital Allocation:

  • Preference for acquisitions over buybacks to build long-term value and global footprint
  • Focus on strategic acquisitions that strengthen core business and geographical distribution

Market Challenges:

  • Acknowledgement of business cyclicality with expected volatility in earnings
  • Increased competition in key markets affecting pricing and market share
  • Input cost inflation affecting agrichem business specifically