Strides Pharma Q3 Results Review - Regulated Markets Drive Growth: ICICI Securities

Strides Pharma’s Q3 performance fell short of our revenue expectations mainly due to negligible sales in institutional business.

<div class="paragraphs"><p>Capsules. (Source: freepik)</p></div>
Capsules. (Source: freepik)

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ICICI Securities Report

Strides Pharma Science Ltd.’s Q3 FY23 performance fell short of our revenue expectations, mainly due to negligible sales in the institutional business. Revenues grew 8.9% YoY (down 3.6% QoQ) to Rs 8.7 billion (our estimate: Rs 10 billion). U.S. sales were up 5% QoQ to $63 million (our estimate: $60 million) driven by volume growth and traction in new product launches.

Emerging market revenues fell 73.9% QoQ to $6 million. Institutional business saw negligible revenues during the quarter due to expiry of contracts. Higher U.S. sales contribution and several cost optimisation initiatives drove a 410 bps QoQ Ebitda margin improvement to 13.5% (our estimate: 11.6%).

Strides Pharma has guided toward a gross debt reduction of ~Rs 10 billion in FY23 and a ‘net debt/Ebitda’ ratio of less than three in the near term. Growth momentum in the U.S. business, likely debt reduction and reasonable valuations make the stock attractive.

Click on the attachment to read the full report:

ICICI Securities Strides_Q3FY23 Results.pdf
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