Natco Q2 FY27: PAT down 61% YoY to ₹203 Cr (consolidated) as Lenalidomide fades

Natco Pharma's consolidated profit for Q2 FY27 came in at ₹202.6 Cr, down 60.9% year-on-year from ₹517.9 Cr and essentially flat quarter-on-quarter (-1.9% versus ₹206.5 Cr). Consolidated revenue from operations of ₹967.3 Cr fell 29.0% YoY but rose 31.6% QoQ. The YoY comparison is the one that matters here: Q2 FY26 was inflated by an exclusivity-driven Lenalidomide (generic Revlimid) spike in the US that has since normalised, and management's own press release attributes the YoY decline "largely" to lower Lenalidomide revenue, partly offset by growth in the base business and subsidiaries. International Formulations revenue (including subsidiaries) nearly halved YoY to ₹668.4 Cr from ₹1,140.2 Cr, even as it rose from ₹477.1 Cr in Q1 FY27 — the QoQ pickup looks like a stabilising base business, not a reversal of the structural Lenalidomide decline. Margins compressed on both comparisons: EBITDA margin before share of associate fell to 30.4% from 46.4% a year ago (roughly flat versus 30.9% in Q1), and net margin on total income slid to about 19.9% from 35.4% YoY and 26.0% QoQ. The sequential margin stability, alongside a 31.6% QoQ revenue recovery, suggests the base pharmaceuticals and agrochemical businesses are no longer deteriorating quarter-on-quarter even as the YoY base effect from Lenalidomide persists. ₹29.2 Cr of the consolidated PAT came from NATCO's 49%-owned associate Adcock Ingram Holdings (South Africa, revenue ₹1,343.8 Cr, PAT ₹80.5 Cr for the quarter) — down from an unusually large ₹84.3 Cr associate contribution in Q1 that reflected provisional purchase-price-accounting adjustments after the stake increase; this makes the QoQ PAT comparison a little noisier than the headline flat print suggests. Standalone PAT of ₹143.2 Cr was down a sharper 71.4% YoY (versus consolidated's 60.9%), a double-digit-point divergence from the consolidated story driven mainly by the associate profit share and subsidiary earnings that sit outside the standalone entity — both numbers will circulate, and the gap is explained by consolidation scope, not a data error. Against management's own FY27 guidance (revenue ₹3,400-3,500 Cr, PAT ₹700-750 Cr, given on the Q1 call under a cautious, high-risk tone), H1 FY27 revenue from operations of ₹1,702.5 Cr annualises to roughly ₹3,405 Cr — inside the guided band, a genuine improvement on the ~₹2,940 Cr pace flagged after Q1's weak start. PAT is murkier: H1 profit before the associate's share was ₹295.6 Cr, annualising to ~₹591 Cr, below the ₹700-750 Cr guided range; only once the outsized Q1 associate contribution is folded in does the H1 total of ₹409.1 Cr annualise above guidance (~₹818 Cr), a result that leans on a provisional, acquisition-related accounting item rather than recurring operations. On balance this reads as tracking below the PAT guidance on a core basis. We found no quarter-specific Street consensus for this print to grade against (vsStreet unknown); a web search surfaced only a full-year FY27 analyst estimate materially below even management's own guidance, underscoring that the market has been pricing a tougher outcome than the company's stated band. The quarter's corporate actions — a completed ₹1,279 Cr rights issue (1.7 Cr shares at ₹750 each) and a second interim dividend of ₹1.25/share declared alongside results — both land after the Lenalidomide-driven profit base has already reset lower, and tie to funding the expanded Adcock Ingram stake and the company's ongoing ₹250-300 Cr/year capex plan. Going into H2 FY27, the key swing factor flagged publicly around this result is that management has characterised Q2 as the last meaningful Lenalidomide quarter, with negligible contribution expected in Q3 and Q4 — meaning the base pharmaceuticals and agrochemical business, not the US generic-exclusivity window, will have to carry both the revenue and margin guidance from here.