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ICICI Securities Report
Strides Pharma Science Ltd.'s Q2 FY24 revenue growth (up 11% YoY) was better, though Ebitda margins (adjusted 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 contract development and manufacturing organisation business under one umbrella ‘Onesource' – this entity will likely clock revenues of $400 million in FY27, from $150 million in FY24E.
It is also divesting a new manufacturing facility of Stelis to Syngene for Rs 7 billion and its Singapore-based facility for $15 million to Rxilient Biohub (completion in Q3 FY24).
Strides Pharma aims for a strong H2 FY24 with improved profitability. It now aims to achieve the higher-end of FY24E U.S. sales and Ebitda guidance of $250 million and Rs 7,500 million respectively.
We raise our FY24E EPS by ~3% while maintain our FY25 estimates. Strides has corrected ~10% since September 2023.
We upgrade our recommendation to a 'Hold' (from 'Reduce') with an unchanged target price of Rs 495 based on 14 times FY25E EPS
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