Event
USFDA has announced laboratory results of the lab tests conducted on Ranitidine samples for assessing the levels of NDMA impurity – Positive for Strides
Key highlights
Valuations & view
Post a tough FY18, Strides has effected a fairly remarkable recovery in FY19 with the US sales growing from $21m in Q4FY18 to $57m in Q2FY20. Temporary disruptions in Ranitidine are more than effectively offset by strong growth in overall US sales and mgt focus on profitability over volumes. The operating performance is set to improve further in coming quarters with the crossing of the profitability inflection point and other regulated markets also reaching a critical mass. Australia business exit is positive as it has meaningfully de-leveraged the balance sheet – a key investor concern. Overall, this should drive 27% CAGR growth in EBITDA over FY19-21E. Over the medium term, Strides’ proposed re-entry in injectables business could be an interesting value driver. Maintain Outperformer with a target price of Rs569 (8x FY21E EBITDA).
Strides Pharma Science Ltd, formerly Strides Shasun Limited, is a vertically integrated global pharmaceutical company. The Company is engaged in the development and manufacturing of active pharmaceutical ingredients (APIs) and formulations, as well as biotech. Its business segments include Pharmaceutical and Biotech businesses. Its geographical segments are Africa, Australasia, North America and Europe, South and Central America, India and Others. The Company focuses on developing complex pharmaceutical products across therapeutic segments. The Company's products include general tablets, hard gelatin capsules, soft gelatin capsules, sachets, dry powders, dry syrups, potent drugs, semi solids, ointments and creams. It is also involved in supplying generics to hospitals approved by the National Health Service (NHS) and over-the-counter (OTC) products through retail outlets. It operates approximately 10 facilities, which are diversified across Asia, Africa and Europe.
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