Natco Tumbles on Weak Q3
- 13th February 2025
Aaj Ka Bazaar
Wall Street’s main indexes closed on a mixed note on Tuesday, with gains in Coca-Cola and Apple offsetting losses in Tesla. Investors were closely analyzing the latest comments from Federal Reserve Chair Jerome Powell. He stated that the central bank does not need to rush to adjust interest rates, indicating that officials will be patient before further lowering borrowing costs. In Asia, equities also displayed mixed results. Japanese stocks saw an increase, while Australian shares remained stable in anticipation of the US inflation report scheduled for Wednesday. Additionally, stock index futures suggested potential gains for Hong Kong stocks. Considering the global market cues, the domestic equity benchmark indices, Sensex and Nifty 50, are expected to open cautiously on Wednesday following a significant decline in the previous session and amid mixed signals from global markets. Moreover, Prime Minister Modi’s two-day visit to the US, beginning on Wednesday, comes at a crucial time. As he meets with President Trump to discuss trade, there are hopes for a breakthrough that could ease tariff tensions and restore market confidence.
Markets Around Us
BSE Sensex -76,666.20 (0.65%)
Nifty 50 – 23,140.15 (0.41%)
Bank Nifty – 49,691.05 (0.85%)
Dow Jones – 44,561.63 (0.19%)
Nasdaq – 19,648.78 (0.03%)
FTSE – 8,807.39 (0.34%)
Nikkei 225 – 39,523.13 (1.46%)
Hang Seng – 21,644.77 (1.56%)
Sector: Pharmaceuticals
Natco Pharma plunges 18.5% on weak Q3
Natco Pharma shares dropped 18.5% on February 13 after disappointing Q3FY25 results. Net profit fell 38% YoY to ₹132.4 crore, while revenue declined 37% to ₹474.8 crore. EBITDA margin collapsed from 35.3% to 8.2%, mainly due to a sharp drop in formulation exports, which fell over 50% to ₹285.8 crore. Domestic formulation sales also dipped slightly to ₹96.1 crore. Since exports contributed 44% of Q3 revenue (down from 76% in FY24), the earnings impact was significant. The stock has been falling for five straight sessions, losing 25% in this period. Heavy selling pressure was seen, with 24 lakh shares traded—five times the monthly average—intensifying the decline
Why it Matters:
Natco Pharma’s sharp profit decline and margin erosion highlight major weakness in exports, which form a significant part of its revenue. The stock’s continued slide and high trading volumes indicate strong selling pressure and shaken investor confidence. Traders should watch for recovery in exports and operational improvements to gauge future performance.
NIFTY 50 GAINERS
TCS – 4015.00 (1.30%)
TECHM – 1684.50 (0.92%)
INFY – 1889.95 (0.76%)
NIFTY 50 LOSERS
M&M – 2965.00 (-3.92%)
BEL – 256.75 (-3.13%)
RELIANCE – 1198.30 (-2.96%)
Secto: Auto Components & Equipments
Bharat forge weaks Q3
Bharat Forge shares dropped over 5% to ₹1,047 after reporting weak Q3FY25 results. The stock has fallen over 30% in six months, underperforming Nifty 50’s 4% decline. Net profit dropped 16.4% YoY to ₹212 crore, while revenue fell 7.4% YoY to ₹2,095 crore. EBITDA declined 8% to ₹609 crore, with margins narrowing slightly to 29.1%. The company blamed weak European demand and volatility in the defence business. Despite this, Bharat Forge secured new orders worth ₹830 crore, with its defence segment generating ₹337 crore in revenue. The defence order book now stands at ₹5,706 crore, with expectations of strong long-term growth. The board announced an interim dividend of ₹2.50 per share, payable by March 12, with February 18 as the record date. Management remains optimistic about future defence revenue, expecting it to reach ₹2,200 crore in FY26, despite short-term volatility in the sector.
Why it Matters:
Bharat Forge’s weak performance and stock decline signal challenges in exports and defence business volatility, impacting investor confidence. However, strong order wins and long-term defence growth prospects suggest potential recovery. Traders should watch for demand improvements and execution of the ₹5,706 crore order book.
Around the World
Asian stocks rose on Thursday, driven by an AI-fueled rally in China and tech dealmaking in Japan, despite concerns over high U.S. inflation. Chinese markets, including the Hang Seng, gained as AI optimism pushed stocks up 5-15% since January. However, broader sentiment remained weak due to trade tensions with the U.S. Japan’s Nikkei 225 jumped 1.2%, helped by a weaker yen and a bidding war for cybersecurity firm Trend Micro. South Korea’s KOSPI rose 0.9%, benefiting from China’s AI boom. Meanwhile, Australia’s ASX 200 inched up 0.2%, while Singapore’s Straits Times dipped 0.2%. U.S. stock futures rose in Asian trade despite Wall Street losses from stronger-than-expected inflation data, which reduced hopes for rate cuts. Risk appetite improved as Donald Trump talked about a Russia-Ukraine peace deal, leading to a drop in oil prices. India’s Nifty 50 futures pointed to a positive start, though U.S. tariff threats and weak sentiment weighed on the market.
Option Traders Corner
Max Pain
Nifty 50 – 23,200
Bank Nifty – 50,000
Nifty 50 – 22,996 (Pivot)
Support – 22,874, 22,649, 22,501
Resistance – 23,193, 23,342, 23,540
Bank Nifty – 49,305 (Pivot)
Support – 48,908, 48,337, 47,940
Resistance – 49,876, 50,273, 50,844
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