NATCO Pharma Ltd. moves to reshape its capital structure

The final subscription level and the actual post-issue paid-up share capital could not be confirmed from the rights-issue closure filing. It only states that NATCO Pharma’s issue was for up to Rs 1,279.4 Crores, at Rs 750 per share, with a Rs 2 face value, and closed on 22 October 2026 ^[1].

Full-subscription pro-forma impact

Using the full issue size as a ceiling, rather than as the confirmed final subscription:

• Existing paid-up equity share capital: Rs 35.80 Crores ^[2]
• Existing shares: 17.90 Crores, derived from Rs 35.80 Crores / Rs 2 face value
• Maximum new shares: 1.71 Crores, derived from Rs 1,279.4 Crores / Rs 750
• Increase in paid-up capital: Rs 3.41 Crores, derived from 1.71 Crores shares × Rs 2 face value
• Post-issue paid-up capital at full subscription: approximately Rs 39.21 Crores
• Share-count increase: approximately 9.53%

NATCO’s TTM Q1 FY27 EPS was Rs 63.89 ^[3]. Assuming TTM earnings remain unchanged and the issue is fully subscribed, the mechanical pro-forma EPS would be:

Rs 63.89 × 17.90 / 19.61 = approximately Rs 58.33

That implies a dilution of approximately Rs 5.56 per share, or 8.70%, versus the reported TTM EPS. This is a mechanical dilution calculation, not a forecast: any earnings generated from deploying the rights proceeds would reduce the eventual dilution.

The key distinction is that the Rs 3.41 Crores increase in paid-up capital reflects only the Rs 2 face value component; the balance of the issue proceeds would be recorded as securities premium. If the final subscription was below the maximum, both the capital increase and EPS dilution would be proportionately lower.

Natco Pharma’s rights issue closed with a reported gross issue quantum of Rs 1,279.4 Crores (Rs 12,794 million) ^[4]. This is the issue size; net proceeds after issue expenses and the final allotment reconciliation could not be confirmed from the closure report.

Balance-sheet impact

The latest reported balance-sheet metrics are from Q1 FY27: net debt was Rs 507.5 Crores ^[5], total debt was Rs 706.4 Crores ^[6], and interest coverage was 18.90x ^[7].

• Pro forma net debt: If the full gross proceeds are retained as cash or used to repay debt, net debt would fall by approximately Rs 1,279.4 Crores:

Rs 507.5 Crores − Rs 1,279.4 Crores = negative Rs 771.9 Crores, or approximately Rs 771.9 Crores of net cash. This is a derived pro forma estimate using the reported issue quantum and pre-issue net debt ^{[4] [5]}.

• Debt repayment capacity: The proceeds exceed the reported Rs 706.4 Crores of total debt, so the company could theoretically extinguish that debt and retain roughly Rs 771.9 Crores of cash before issue costs and other uses ^{[6] [4]}.
• Interest coverage: The reported 18.90x ratio is pre-rights and does not automatically change when equity proceeds are raised ^[7]. It would improve if the proceeds are used to repay interest-bearing debt, but the post-issue ratio cannot be calculated without the post-closure debt balance, repayment timing and interest expense. If all debt is repaid, conventional interest coverage would become less meaningful because interest expense would approach zero.

Bottom line: The rights issue is large enough to transform Natco Pharma from reported net debt of Rs 507.5 Crores into a pro forma net-cash position of about Rs 771.9 Crores, assuming the proceeds remain on the balance sheet or are deployed against debt. The 18.90x interest-coverage figure should not yet be relabelled as a post-rights ratio.