Strides Pharma - Regrouping CDMO Pieces To Unlock Value: ICICI Securities

ICICI Securities Report

Strides Pharma Sciences Ltd. is streamlining its contract development manufacturing organisation 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 $180-200 million in FY25E and management expects to grow 20-25% per annum thereon.

In the near term, injectable and soft gelatin businesses may drive growth while biologic business is likely to boost growth from FY26E.

The regrouping factors a premium valuation of 17 times FY24 enterprise value/Ebitda for soft gel business, 15.7 times for generic injectable business and Rs 29.2 billion for the existing business of Stelis.

We maintain our estimates for FY24E and FY25E.

The stock has run-up 20% since Q1 FY24 result. We lower our rating to 'Reduce' (from Hold) though we revise our target price to Rs 495 (Rs 460 earlier) on 15 times FY25E earnings ( earlier: Rs 460 based on 14 times FY25E earnings per share).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.