For the dreamers, the magic pill of Natco may be seen in 2024
When things arent going your way, bend the chart and make the technicals prove your thesis!
The monthly chart of Natco shows that its been travelling more or less within a parallel channel and is yet to complete an Impulse wave which began in 2002 and is most likely in the start of wave 5 (specifically completing wave 1 and undergoing corrective wave 2 of bigger degree wave 5)
The good news? whenever the correction ends, a bull run may occur in Natco and the way things are stacked for the company, addressing the usfda problems in Kothur looks to be the trigger now as it has already demonstrated ability to earn super normal profits thorugh its policy of complex generics... how much lower the price will go is anyones guess....how high it can reach...well, there was not enough display space in my laptop to fit in the extension of parallel channel and show the max limit...lol!
P.S.
Wave 2 correction may be more severe if an Import Alert is issued to the Kothur plant .. most retail shareholders including myself may not be able to hold on if and when this occurs so tread knowingly
The monthly chart of Natco shows that its been travelling more or less within a parallel channel and is yet to complete an Impulse wave which began in 2002 and is most likely in the start of wave 5 (specifically completing wave 1 and undergoing corrective wave 2 of bigger degree wave 5)
The good news? whenever the correction ends, a bull run may occur in Natco and the way things are stacked for the company, addressing the usfda problems in Kothur looks to be the trigger now as it has already demonstrated ability to earn super normal profits thorugh its policy of complex generics... how much lower the price will go is anyones guess....how high it can reach...well, there was not enough display space in my laptop to fit in the extension of parallel channel and show the max limit...lol!
P.S.
Wave 2 correction may be more severe if an Import Alert is issued to the Kothur plant .. most retail shareholders including myself may not be able to hold on if and when this occurs so tread knowingly
Comment:
Q2 results are downright amazing... entire last years net profit has been earned in the first half of this year.. investors need to patiently hold for next 2 quarters despite all the noise of usfda observations and knowing that Q3 will be a relatively weak quarter.. however by Q4, it will again book the manufacturing for gRevlimid going by last years accounting and may well resolve usfda issue.. those interested / invested should tune into tomorrows concall
Comment:
Going through the presentation and the post Q2 conference call the following points are furthering my bullish thesis on Natco for the medium term (3-5 years)
Company is expecting 2 more years of growth from gRevlimid as the percentage share increases to 33% calendar year by Jan 2026, so 2024 & 2025 may still build over 2023 for this drug. Competition from other players have been factored in.
In these 2 years there could be atleast 3 formulations from the present approved para IV pipeline for which Natco may get to launch in the US and possibly other reguated markets. These being Ibrutinib, Carfilzomib & Bosentan, the brands being Imbruvica, Kyprolis, Tracleer and for all three they have the first to file as well. So Natco in all likelihood is not going to be a one trick pony in the coming years. If one looks at their presentations going 3 years back Imbruvica, Kyprolis, Tracleer brands were all there in the para iv pipeline and therefore this makes perfect sense when the promoter expects these molecules will provide growth.
Company is targetting 25% annual growth from the Brazil & Canada subsidiaries and agro business. Promoter has stated that he is confident of maintaining the margins for the next couple of years based on the product pipeline and launches.
Despite the USFDA observations on Kothur plant, as all major products including Lelanomide has approvals from Vizag plant so the company expects minimum impact from the fallout. We should get some idea of it by February 2024.
In the mean time company has Rs. 1550 crores in cash equivalents and hopefully it would spend this growing cash wisely for the benefit of all its shareholders. Natco is maturing as a disruptive complex generics player and it is building up the para iv pipeline continuously. Q1 presentation it stated it had 19 para iv products in the pipeline of which 7 were approved and in Q2 this became 23 of which 15 are approved (on second thoughts this could be a typo in the Q1 presentation and I have queried the management on this. However, it doesnt take away the shine from the envious list that it is lining up).
Based on the above I expect the share price to form lows in Nov - Dec from a medium term perspective.
Company is expecting 2 more years of growth from gRevlimid as the percentage share increases to 33% calendar year by Jan 2026, so 2024 & 2025 may still build over 2023 for this drug. Competition from other players have been factored in.
In these 2 years there could be atleast 3 formulations from the present approved para IV pipeline for which Natco may get to launch in the US and possibly other reguated markets. These being Ibrutinib, Carfilzomib & Bosentan, the brands being Imbruvica, Kyprolis, Tracleer and for all three they have the first to file as well. So Natco in all likelihood is not going to be a one trick pony in the coming years. If one looks at their presentations going 3 years back Imbruvica, Kyprolis, Tracleer brands were all there in the para iv pipeline and therefore this makes perfect sense when the promoter expects these molecules will provide growth.
Company is targetting 25% annual growth from the Brazil & Canada subsidiaries and agro business. Promoter has stated that he is confident of maintaining the margins for the next couple of years based on the product pipeline and launches.
Despite the USFDA observations on Kothur plant, as all major products including Lelanomide has approvals from Vizag plant so the company expects minimum impact from the fallout. We should get some idea of it by February 2024.
In the mean time company has Rs. 1550 crores in cash equivalents and hopefully it would spend this growing cash wisely for the benefit of all its shareholders. Natco is maturing as a disruptive complex generics player and it is building up the para iv pipeline continuously. Q1 presentation it stated it had 19 para iv products in the pipeline of which 7 were approved and in Q2 this became 23 of which 15 are approved (on second thoughts this could be a typo in the Q1 presentation and I have queried the management on this. However, it doesnt take away the shine from the envious list that it is lining up).
Based on the above I expect the share price to form lows in Nov - Dec from a medium term perspective.