Indian multinational pharmaceutical company Natco Pharma’s shares gained on Tuesday, a day after the company received approval from the Delhi High Court to launch the insecticide Chlorantraniliprole (CTPR) and its formulations.

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Investors on D-Street seem excited with the development as Natco Pharma shares jumped 3.5 percent in early deals and were trading at Rs 652.10, 2.4 percent higher from the previous close at 10:45 am.

Though the stock has gained in the past five days, in a year, it has erased nearly 30 percent of investors’ wealth.

Tuesday’s uptrend follows Delhi High Court’s order to the Hyderabad-based firm to launch the insecticide through a non-infringing process, according to an exchange filing.

The firm was engaged in a legal battle as US-based FMC Corporation had filed a patent infringement case against Natco Pharma in court.

CTPR or Chlorantraniliprole technical is formulated into broadspectrum insecticides used across various crops for pest management. According to Natco Pharma, the current market size of CTPR-containing products in India is estimated to be around Rs 2,000 crore.

The company claims it is the first in India to receive registration approval from the Central Insecticide Board & Registration Committee (CIB&RC) for indigenous manufacturing of CTPR. It plans to launch its products soon.

DAM Capital Advisors sees this development as positive and maintain its buy stance on the stock with a target price of Rs 840, a 32 percent upside from Monday’s closing price.

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According to DAM Capital Advisors, considering that the Kharif season is almost over, the approval is a tad late for the 2022-2023 fiscal’s Kharif season. However, the product is expected to contribute positively to the rabi season (harvested in April/May) and help kickstart Natco’s agrochemical vertical.

“In the forthcoming cropping seasons, Natco’s opportunity will be linked to competitive dynamics in the CTPR market. Given that Natco is a new player, it needs a limited competition scenario to succeed,” it said.

“We currently est agrochemical sales of Rs 1 billion/Rs 1.3 billion with EBITDA contribution of Rs 500 million/Rs 650 million for FY23/24E, primarily led by CTPR,” DAM Capital added.

ON FMC’s litigation, the brokerage said, if it continues to litigate against all prospective generic players, it may lead to a limited competition market for the next few years despite the expiry of the main matter of composition patent in August 2022. “This may be a positive outcome for Natco despite the delayed approval/launch of CTPR,” it said.

The brokerage added that at a broader level, the agro chem vertical launch underlines Natco management’s strategy to pursue its unconventional growth strategies to create new medium-term growth engines, including investments in value-creating R&D projects for the US market and selective inorganic growth. These initiatives add comfort to management’s ability to create growth drivers beyond gRevlimid, it said.

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