Strides Pharma Science Ltd. share price target

Management remains optimistic about performance in other regulated markets, anticipating stronger revenue growth in FY26 as European partners prepare for product launches. The company also expects these markets to eventually generate...

Q2FY25 revenues totaling Rs. 1,201 crore, demonstrating a significant y-o-y growth rate of 20%.EBITDA stood at Rs. 236 crore, marking a remarkable y-o-y increase of 31%.

Strides Pharma Science (Strides)’s Q2FY24 revenue growth (up 11% YoY) was better, though EBITDA margins (adj. margins at 16.8%) were a tad weaker than anticipated. Revenue growth in the quarter was driven by other regulated markets (35% YoY) and Africa (up 36%). Strides is re-grouping its CDMO business under one umbrella ‘Onesource’ – this entity will likely clock revenues of USD 400mn in FY27, from USD 150mn in FY24E.

Strides Pharma (Strides) is streamlining its CDMO business by merging its soft gel capsule business and injectable business of Steriscience with Stelis. It will also rename Stelis to OneSource after completion, and regrouping will help the promoter better align the focus on all the arms of the CDMO business. The combined entity is likely to have revenue of USD 180-200mn in FY25E and management expects to grow 20-25% p.a. thereon.

Strides Pharma Science’s (Strides) Q1FY24 earnings exhibited a healthy beat on margin front. Improved product mix, cost-optimisation initiatives and freight costs led to expansions in gross margin (+880bps YoY) and EBITDA margin (+1,250bps). Management aspires to improve from these levels going ahead. Adjusted for divested businesses, revenue recorded a healthy 11% YoY growth.

Strides Pharma Science’s (Strides) Q3FY23 performance fell short of our revenue expectations, mainly due to negligible sales in the institutional business. Revenues grew 8.9% YoY (-3.6% QoQ) to Rs.8.7bn (I-Sec: Rs10bn).

Strides Pharma Science’s (Strides) Q2FY23 performance fell short of our estimates due to underperformance in regulated markets other than the US, which reported strong recovery with a 30% QoQ rise to US$60mn.

Strides reported its Q2FY22 revenue at Rs. 721cr, (4.8% QoQ, -9% YoY), enabled by a bounce back in the other regulated markets which was partially offset by an underperformance in the US markets. US markets (34% of total revenues) witnessed a 17% QoQ/-38% YoY...

STR reported a lower than expected performance in 2QFY22 due to continued headwinds in the US business. Sales in other regulated markets witnessed a recovery, with an 18% YoY growth. With the completion of Endo products and facility acquisition, STR will have a diversified US portfolio, with a lower proportion of Acute products as well as differentiated products such as hormones, Nasal Sprays, Gels, Modified Release products, and controlled substances, which are less susceptible to price shocks like that seen in 1HFY22. Other regulated/emerging markets are...

Strides reported a weak quarter witnessing a de-growth across revenues of 12% YoY to Rs.688cr during Q1FY22 owing to major sector headwinds such as high logistics cost, price erosion and increased competition. US markets saw a decline of -25% due to double digit price erosion, lower prescription rates and elective surgeries. Other regulated markets were at $30m from $35m in Q1FY21 due to lockdowns in the UK leading to supply chain disruptions. Institutional business was subdued by 33% on account of lower take off of TLD in the quarter. However, the African business reported a 4% QoQ growth despite lower demand for acute...

Strides Pharma (STR) reported unexpected operational loss in 1QFY22 on lower demand, higher competitive intensity in US Generics, and low operating leverage. This was exacerbated by the impact on production and supply due to a severe second COVID wave in Bengaluru. As a quick mitigation plan to increase product launches, it aims to acquire a portfolio of differentiated ANDAs, including 20 already commercialized products and a manufacturing facility from Endo Pharma in the US. The acquisition would double the approved product portfolio and add...

The emerging markets grew by 107% YoY with growth in institutional biz. driven by TDL. The company announced its partnership with TLC to launch Amphotericin B Liposome for Injection 50mg. We expect a revenue CAGR of 15% over FY21E-FY23E on the back of strong existing product portfolio, new product basket to aid COVID treatment and strengthening of front-end presence. Hence, we upgrade our rating from Accumulate to Buy based on...

STR's 4QFY21 operational performance was marginally below our estimate. The robust performance in the US/Institutional segment within emerging markets was offset by subdued sales in other regulated markets on account of COVID-19. In addition to commercial manufacturing of the Sputnik vaccine by Oct'21, STR is building a basket of COVID-related medicines. The...