Natco Pharma’s Mega Capital Raise: Rs 1,279 Crore Rights Issue Gets Board Approval

Natco Pharma Ltd has approved a rights issue of up to Rs 1,279.36 crore, giving the drugmaker additional financial flexibility as it evaluates acquisitions, funds capital expenditure and invests in its product pipeline.

The board approved the issue of up to 1,70,58,082 equity shares at Rs 750 each, comprising a face value of Rs 2 and a premium of Rs 748 per share. The issue price represents a discount of about 10.8 per cent to the stock’s market price of Rs 840.65 as of 12:27 p.m. on September 25, 2026.

The rights issue will open on October 12, 2026, and close on October 22, 2026. October 1, 2026, has been fixed as the record date. Eligible shareholders will be entitled to subscribe to two rights shares for every 21 fully paid-up shares held on the record date.

At full subscription, Natco’s equity share capital would rise from 17,91,09,870 shares to 19,61,67,952 shares. The fresh issue represents about 9.5 per cent of the pre-issue share base and would account for roughly 8.7 per cent of the enlarged equity capital. Shareholders who do not subscribe could therefore see their ownership diluted.

The company has provided for on-market renunciation of rights entitlements between October 12 and October 16. Shareholders with fewer than 21 shares will not receive rights entitlement, though they can apply for additional shares and will receive preference for allotment of one additional share, subject to availability.

The fundraise is sizeable relative to Natco’s operations. Based on consolidated revenue from operations of Rs 4,078.3 crore in FY26, the maximum issue size is equivalent to about 31 per cent of annual revenue. The company’s announcement did not specify the deployment of proceeds.

However, management had earlier indicated that it was considering multiple fundraising avenues, including a rights issue and a qualified institutional placement, to support potential acquisitions, short-term loans and continuing capital expenditure. It had said organic capex typically runs at around Rs 250 crore to Rs 300 crore annually and had referred to evaluating two acquisition opportunities, including one overseas transaction.

The need for balance-sheet flexibility follows Natco’s acquisition of a 35.75 per cent stake in South Africa’s Adcock Ingram Holdings during FY26. The company has positioned Adcock as both a financial investment and a route to introduce Natco-origin products in South Africa, though management has cautioned that recent strong associate earnings were helped by a favourable flu season and should not be annualised.

Natco’s consolidated revenue declined 7.9 per cent year-on-year to Rs 4,078.3 crore in FY26, while profit after Tax fell 24.7 per cent to Rs 1,418.5 crore. The company has been attempting to diversify its earnings mix through domestic formulations, Brazil, Canada, the Crop Health business, complex generics and specialised therapies.

The shares were marginally lower than the previous close of Rs 841.85. At the prevailing price, the stock was about 30.5 per cent below its 52-week high of Rs 1,208.75, though around 6 per cent above its 52-week low of Rs 792.90. Over the past year, Natco shares declined 1.16 per cent, compared with a 4.30 per cent decline in the BSE 500.

The final terms governing fractional entitlements and allotment will be detailed in the letter of offer. Rights entitlements under dispute, court proceedings, transmission cases or demat suspense accounts will remain in abeyance until ownership-related matters are resolved.

Disclaimer: The article is for informational purposes only and not investment advice.